According to Minneapolis Fed President Gary Stern, federal regulators need to be cautious in efforts to craft a regulatory response to the subprime meltdown. Stern made the comments in Singapore, and noted that his comments are meant to suggest that there is likely little, if any 'low hanging fruit' to harvest and that, specifically, reforms may well impose inefficiencies and other costs of their own. Stern explained that he was not defending the status quo, rather urging caution.

The longest-serving of the dozen Fed bank presidents stated that policymakers will certainly find opportunities to improve current regulations, but that they should be aware of tradeoffs. Stern believes that government officials should not attempt to dissemble the originate to distribute model that is commonplace in the mortgage market. The originate to distribute model has come under fire of late, as it allows mortgage brokers to create low-quality mortgages that they had no stake in how (and if) the mortgage performed in the long run. Finally, Stern defended the Fed, taking issue with implications that the Fed kept interest rates too low in the beginning of 2002, causing the subprime meltdown.