Credit crisis is not yet over: Merrill Lynch

March 8th, 2008 - 10:11 pm ICT by admin  

Paris, March 8 (DPA) The credit crisis in the US mortgage market is not yet over, according to US investment bank Merrill Lynch, and it is spreading to other areas. In an interview with France’s Le Figaro newspaper published Saturday, Merrill Lynch chief executive John Thain said that the crisis had spread from mortgages to car loans, community credit and to the commercial credit market in general.

More and more loans were not being serviced in the US, he said, and the result was “a very pronounced slow-down in economic activity”.

Thain said the cause of the credit crunch was a “liquidity bubble” caused by excessive credit awards during a long period of low interest rates.

“Everyone bears some responsibility: the mortgage lenders, the institutions that sold this credit on to others, the valuation agencies that evaluated the loans and the investors who bought them,” the newspaper quoted Thain as saying.

Merrill Lynch has had to write off $11.5 billion as a result of the subprime mortgage crisis and made a loss of $8.6 billion last year.

The bank raised $12.8 billion from Singapore, Kuwait and South Korea, among others.

The state investors did not have seats on the board of directors and held less than 10 percent of the company’s total shares, Thain reassured.

There was no need to raise additional funds, Thain said.

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