Chris Dodd for President

Senate Banking Chairman Christopher Dodd, D-Conn., citing persistent U.S. mortgage market problems, on Friday delivered sharp criticism of federal banking regulators.

Continued troubles in the mortgage market helped push stock prices down Friday, with Dow Jones Industrial Average falling 281.42 points to 13,181.91. American Home Mortgage Investment Corp. (AHM), one of the largest U.S. mortgage lenders, said it would lay off more than 6,000 workers and stop taking mortgage applications as it struggles to avoid bankruptcy.

And Bear Stearns Cos. (BSC) saw its outlook downgraded by Standard & Poor's amid problems with hedge funds.

"It highlights, once again, that regulators were too slow to react to subprime and other lending practices that were clearly unsustainable," Dodd said in a statement.

Dodd, a Democratic presidential candidate, said this problem was concentrated in higher-risk adjustable mortgages with lax underwriting standards. . . .

U.S. Sen. Christopher J. Dodd is turning up the heat on military brass and federal financial regulators to help ensure that all active-duty troops can take advantage of a federal law that establishes a 6 percent cap on their finance and mortgage interest charges.

Dodd, chairman of the powerful banking committee and a candidate for president, sent letters late Friday to Defense Secretary Robert M. Gates and to federal regulators asking them to detail what they have done to inform military personnel of those rights and to ensure that the military can take full advantage of them.

The Connecticut Democrat asked Gates and the regulators to work together on this issue.

Dodd took this action in response to my June 22 Watchdog column in which I detailed how for months large financial institutions ignored the requests of three Iraq-based service members to have the interest rates on their credit cards and loans capped at 6 percent.

Dodd included the column in his letters to Gates and to the regulators.

``Our nation places extraordinary demands on our troops. The last thing that they should be worried about is an onerous interest rate when they are sacrificing so much for our nation,'' Dodd wrote to John C. Dugan, comptroller of the currency, and to regulators responsible for overseeing credit unions and state and federal chartered banks. . . .