Federal Reserve Bank of Boston President Eric Rosengren said mortgage lenders were left with little or no supervision leading into the U.S. financial crisis, and that now troubles in the housing sector have spilled into the broader economy. Rosengren spoke at the Citizens' Housing and Planning Association's 41st dinner Thursday night.

Recent efforts by government to resuscitate lending have been "powerful," said Rosengren, adding and that they'll work towards the essential - restoring financial institutions' capital and their willingness to loan it.

The housing market has to bottom out before it gets better, he said.

He said after some time markets will return to normal, and that growth in 2009 could be "closer to potential."

By Megan Ainscow
©CEP News Ltd. 2008