Household finance expert Karen Dynan talks with Cleveland Fed's Forefront

Karen Dynan, co-director of economic studies at the Brookings Institution, shares some thoughts on regulation and housing finance in the wake of the financial crisis, in the latest issue of Forefront, the Federal Reserve Bank of Cleveland's policy publication. Says Dynan:

"Managing one's finances is really complicated...even for people like me with training in economics. We shouldn't just be emphasizing providing information. We really need to think about designing simple, low-cost products that are easily understood by a wide range of the population."

On reforming Fannie Mae and Freddie Mac: "We need explicit and limited government guarantees for mortgage loans." And securitization "really needs to move back into the private sector."

On household deleveraging: "The deleveraging has been concentrated in certain groups - people who defaulted on their mortgages and people not taking out loans that they otherwise would have." Highly leveraged households that didn't default "probably  haven't made a lot of progress deleveraging...and we need to think about what we can do to help."

Also in Forefront:

Bank economist Todd Clark explains the Taylor rule, a guidepost used by Federal Reserve policymakers and others who prepare economic forecasts. The Taylor rule says central banks should change interest rates based on two indicators: inflation relative to its target and the level of economic activity relative to the economy's potential. Clark says the rule effectively summarizes the past behavior of monetary policy,

And you'll get a taste of some cutting-edge research that is aiding efforts to advance educational attainment across the United States.