Too little, and much, much too late?

The staff of the Federal Reserve has proposed new rules on subprime mortgages in an effort to prevent questionable lending practices.

"Unfair and deceptive acts and practices hurt not just borrowers and their families, but entire communities, and, indeed, the economy as a whole," Fed chairman Ben Bernanke said before a board meeting on the proposed new rules.

Under the proposal, lenders would have to bill borrowers for escrow on taxes and insurance and would be prevented from penalizing subprime borrowers who pay off their loans early. "No documentation" loans would also be prohibited.

Of course, the subprime mortgage market collapsed more than a year ago. Since then, there has been much finger-pointing at federal banking regulators, contending that they allowed unscrupulous lending practices to proliferate.

As Edmund Andrews details in the New York Times, the Federal Reserve and other regulators did not move to tame the mortgage industry's excesses until very late in the game. "Both the Fed and the Bush administration placed a higher priority on promoting 'financial innovation' and what President Bush has called the 'ownership society,'" Andrews writes.

David Wyss, chief economist at Standard & Poor's, told Bloomberg News, "We always lock the barn door after the horse has gone."

Fed officials, he said, want to "restore confidence in this category" of mortgages so that lenders "will start making these loans again."

The slump in housing that toppled the subprime market continues to deepen. Today, the Commerce Department reported that construction starts on new single-family homes fell 5.4 percent in November, to a seasonally adjusted annual rate of 829,000, the lowest pace since April 1991.