Bernanke Says He Erred in Gauging Mortgage Fallout (AP)

  Nov. 23, 2008 -- WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke acknowledges he was wrong in believing that there would be limited fallout to financial markets from risky mortgages that soured after the housing market's collapse.

''I and others were mistaken early on in saying that the subprime crisis would be contained,'' Bernanke said in an article in the Dec. 1 issue of The New Yorker magazine.

''The causal relationship between the housing problem and the broad financial system was very complex and difficult to predict,'' he said in the piece titled ''Anatomy of a Meltdown.''

Subprime mortgages made to people with tarnished credit or low incomes were especially hard hit once the housing boom went bust. Foreclosures spiked and financial companies wracked up huge losses as these investments turned bad.

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