BILLINGS -- Gary Stern, president of the Minneapolis Federal Reserve Bank, urged Billings business leaders Thursday to focus on the longterm economic trends, not on the day-to-day market gyrations.

Worries about defaults in subprime mortgages and tightening credit have recently jolted stock markets.

The Dow has lost much of its gain to a record high of 14,000 set July 17. When the markets closed Thursday, the Dow was down 387, finishing at 13,271. That's about a 5 percent correction.

Also Thursday, the European Central Bank provided cash to stabilize money markets after a French bank said it was freezing three funds exposed to U.S. subprime mortgages.

And the Federal Reserve Bank pumped $24 billion -- more than anticipated -- into the U.S. banking system.

Speaking at The Depot, Stern said he hadn't had a chance to listen in on the morning call among Federal Reserve officials, so he declined to comment on the market news. However, influxes of cash are routine to balance money supply and demand, he said.

He advised Montana business leaders to keep subprime lending, which are mortgages to people with poor credit, in perspective.

"It's a relatively small part of the overall mortgage market," Stern said.

American International Group reassured investors that housing prices would have to fall 30 percent to 40 percent -- Depression-era levels -- before the insurance company would be hit hard, The Associated Press reported.

In his Billings speech, Stern said the Fed needs to help educate the public about economics so Americans understand the importance of fighting inflation. The Fed has successfully battled high inflation, he said, and consumer prices, which jumped by about 9 percent a year between 1973 and 1981.

"Inflation has now been reasonably well contained for roughly two decades or so, and the firm consensus in favor of price stability has been sustained," he said.

A National Report Card on Economics released Wednesday showed 79 percent of seniors had at least a basic knowledge of high school economics, 42 percent were proficient and 3 percent had advanced knowledge, Stern said. More than 11,000 seniors from nearly 600 public and private schools were tested.

As for consumer loans, Stern advocated more of a buyer-beware approach.

"Today, we are witnessing some painful and belated learning, by policymakers and consumers alike, about consumer finance," Stern said. However, education rather than more regulation, he said, is the best approach.

"If consumers are more educated and able to make good decisions on their own, regulations can be narrower and more focused on clearly abusive practices such as deceit and fraud," Stern said.