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Credit crunch may take out large US bank warns former IMF chief
Key Excerpts from Article on Website of Times of London
Posted: August 23rd, 2008
http://business.timesonline.co.uk/tol/business/industry_sect...
The deepening toll from the global financial crisis could trigger the failure of a large US bank within months, a respected former chief economist of the International Monetary Fund claimed today, fuelling another battering for banking shares. Professor Kenneth Rogoff, a leading academic economist, said there was yet worse news to come from the worldwide credit crunch and financial turmoil, particularly in the United States, and that a high-profile casualty among American banks was highly likely. The US is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say the worst is to come, Prof Rogoff said at a conference in Singapore. In an ominous warning, he added: Were not just going to see mid-sized banks go under in the next few months, were going to see a whopper, were going to see a big one one of the big investment banks or big banks". Professor Rogoff, who was chief economist at the IMF from 2001 to 2004, predicted that the crisis would foster a new wave of consolidation in the US financial sector before it was over, with mergers between large institutions. He also suggested that Fannie Mae and Freddie Mac, the struggling US secondary mortgage lending giants, were likely to cease to exist in their present form within a few years. His prediction over the fate of Fannie and Freddie came after investors dumped the two groups shares on Monday after reports suggested that the US Treasury may have no choice but to effectively nationalise them.
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