Crunch Time For Banks
Sydney Morning Herald
Tuesday July 15, 2008
THE global credit crisis has entered a dangerous phase with the US Government forced to prop up the country's two biggest mortgage lenders, Fannie Mae and Freddie Mac.
Amid increasing defaults on US home loans, investors have grown increasingly concerned about the exposure of these two mortgage giants to bad loans. US taxpayers will foot the bill for any emergency support package for the two lenders, which are responsible for more than half of all US mortgages. Australian superannuation funds and banks are exposed because they hold shares and other investments in the two lenders. As subprime shockwaves continue to reach Australia, new figures show the rising cost of credit is cutting a swathe through non-bank lenders. And as market power accumulates in the hands of the big four banks, Westpac is expected to follow the lead of the CBA, ANZ and NAB, which have all raised interest rates independently of the Reserve Bank in recent days.
© 2008 Sydney Morning HeraldNews Archive
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