Panel Told Lending Crisis Won't End Soon

The mortgage and credit crisis will take some time to resolve, a U.S. Treasury Department official told a congressional panel Wednesday.

The volatility of the credit and mortgage markets "reflects a reassessment of risk across a broad spectrum of securities," Robert K. Steel, under Secretary for domestic finance, told the House Financial Services Committee.

Domestic and global growth have helped blunt some of the impact of the two events, he told panel members as he presented Treasury's perspective.

"I do want to caution policymakers that this process is far from over," Steel said. "It will take more time to play out and certain segments of the capital markets are stressed."

Risk is being "re-priced," he said, creating a domino effect. The re-pricing will lead to a re-evaluation of assets, which will impact decisions of financial market participants. As investor confidence returns, liquidity will improve, he said.

Policymakers, Steel said, "must remain vigilant as further stress could create further challenges and continued volatility."

He said lawmakers must understand the issues and their causes, as well as continue "to enhance the capital markets regulatory structure to adapt to market developments."