Sen. Jack Reed (D., RI) noting that estimated borrowing against home equity has declined sharply, asked Mr. Bernanke, ?What?s your view of the macroeconomic effect as people no longer can essentially use their equity as a quick source of cash??

Mr. Bernanke responded: ?Our sense ? and this so far seems to be borne out by the data ? is that consumers respond to changes in the value of their home essentially because there?s a change in their wealth, not because there?s a change in their access to liquid assets.?...

Mr. Bernanke went on to reiterate it?s the price of homes, not MEW or financial contagion that represents the biggest risk of spillover from the housing slump. ?House prices, nationally speaking, have not declined,? he said. ?They?ve only risen more slowly, and so we have not yet seen anything except in a few local areas akin to a decline in house prices.? If they do decline, he said a hit to consumer spending could be expected on the order of ?4 cents and 9 cents on the dollar? of lost home wealth.