The Fed cut interest rates again today as they continue in their attempt to swoop in and save the economy from the credit crunch. Much like Superman, but boring and not as effective.

From the Federal Open Market Committee Statement:
Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending. Moreover, strains in financial markets have increased in recent weeks. Today's action, combined with the policy actions taken earlier, should help promote moderate growth over time. They also left themselves some room to cut rates further:
Recent developments, including the deterioration in financial market conditions, have increased the uncertainty surrounding the outlook for economic growth and inflation. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.

The Wall Street Journal analyzed more than $2.5 trillion in subprime loans made since 2000 and found that as the number of subprime loans grew, the loans were being issued to borrowers with better and better credit scores—borrowers who could have qualified for traditional loans with more reasonable terms.

In fact, the WSJ says that at the peak of the subprime boom in 2005 over half of the subprime loans went to people with good credit.

By 2006, 61% of subprime loans were going to people with good or even excellent credit scores.

Why?
The surprisingly high number of subprime loans among more credit-worthy borrowers shows how far such mortgages have spread into the economy -- including middle-class and wealthy communities where they once were scarce. They also affirm that thousands of borrowers took out loans -- perhaps foolishly -- with little or no documentation, or no down payment, or without the income to qualify for a conventional loan of the size they wanted.

The analysis also raises pointed questions about the practices of major mortgage lenders. Many borrowers whose credit scores might have qualified them for more conventional loans say they were pushed into risky subprime loans. They say lenders or brokers aggressively marketed the loans, offering easier and faster approvals -- and playing down or hiding the onerous price paid over the long haul in higher interest rates or stricter repayment terms. As we've A Kiplinger reader The Feb will likely cut rates again in December "providing three conditions are met: financial markets remain distressed, the risks to inflation do not increase and the remaining economic data do not come in stronger than expected." [The Wall Street Journal is reporting that the national average interest rate on the benchmark 30-year, fixed-rate loan averaged 6.1% last week, the lowest rate since Oct 13, 2005.

"Interest rates for U.S. Treasury securities have been drifting lower this month over market concerns that the housing slump and stress in the credit markets could slow future economic growth," said Frank Nothaft, Freddie Mac vice president and chief economist. "As a result, interest rates for fixed-rate mortgages had room to slip lower this week."

That news is sure to make somebody happy.

Federal Reserve Chairman Ben Bernanke isn't feeling too optimistic about the economy these days, according to NPR. He warned Congress today of an coming economic slowdown tied to the subprime meltdown, the surge in energy prices, and oh yeah, did we mention the subprime meltdown?

"Delinquencies on these mortgages are likely to rise further in coming quarters as a sizable number of recent-vintage subprime loans experience their first interest rate resets," Bernanke testified.

"Weakness in the housing market will keep construction in a down trend," he said.

He also had some advice for those of you in mortgage m