Atlanta finance execs discuss mortgage crisis

Federal Reserve Atlanta CEO Lockhart: Housing markets need stabilization [Atlanta] Four of Atlanta’s most prominent financial executives told the Atlanta Commerce Club on Friday the continuing subprime mortgage crisis has rattled the global financial system to its core, and few solutions exist to spur a slowing economy.

Since the collapse of the subprime mortgage market last year, fears of larger credit issues have spread throughout the financial system, impacting how broad swaths of companies, individuals and investors lend and borrow money. This crisis has challenged the basic facts of American culture, said Richard Dorfman, CEO of the Federal Home Loan Bank of Atlanta . In post-war America, we’ve assumed everyone is entitled to own a house, and that those values will rise.

The other panelists included Phillip Humann, chairman of SunTrust Banks Inc. (NYSE: STI), Dennis Lockhart, president of the Federal Reserve Bank of Atlanta , and Martin Flanagan, CEO of Invesco plc .

But did a relatively small swath of loans impact cause lending and credit markets to largely seize up last fall, and how is that now affecting the current economy? The panelists agreed subprime mortgage loans caused global distress because of wide dissemination throughout the financial system, along with few checks on the real risk posed by the loans if a housing slowdown occurred.