Worldwide loses due to sub-prime loans in US will reach $400bil predicted respectable Investment Bankers.

Who is responsible for this huge losses?

None but the much acclaim 'Alan Greenspan':

In his best-selling book, Alan Greenspan describes how well he managed the economy during an "age of turbulence." Unfortunately, he's largely responsible for the current dose of it.

As chairman of the Fed, Greenspan took the federal funds rate down to 1% in 2003 and left it there for a year. Even as the Fed began raising rates, Greenspan's exceptionally low interest rates "planted the seeds for the housing bubble," says Robert Rodriguez, a money manager at First Pacific Advisors who saw the emerging subprime mess early on and has managed to dodge most of it so far.

Greenspan's role in the current mess doesn't stop there. He encouraged the use of adjustable-rate mortgages in a 2004 speech, which was "an insane, idiotic recommendation," says Rodriguez. The following year he endorsed subprime loans to help marginal borrowers get into houses. And true to his somewhat naive brand of Ayn Rand libertarianism, Greenspan dismissed calls for more oversight of the mortgage business. This gave free rein to our next culprits: greedy mortgage brokers who had no problem pushing inappropriate loans on borrowers so that they could reap lucrative fees.

This brings me back to Naija. what will happen to naija once Soludo leaves? will the shit start to hit the fan?

Remember things are not always what its painted by these finance guys.

Extreme risk taking by Speculators, unregulated debt trading between banks, mortgage institutions and other industry players - those are the major factors responsible.

Alan Greenspan does not force a lender to give money to someone without confirming repayment ability,if you take risks and they backfire, you take the heat. Simple

To make a simplistic tie between low interest rates and risky behaviour by a myriad of individuals/firms is inaccurate.

A CEO came in and did a bad job with the mortgage industry and still got 161 Million severance package.  so go figure


http://money.cnn.com/2007/10/29/news/companies/merrill_oneal/

Mamajama:

A CEO came in and did a bad job with the mortgage industry and still got 161 Million severance package. so go figure


http://money.cnn.com/2007/10/29/news/companies/merrill_oneal/

The Company understood the risk involved before they hired him and agreed to give him such a huge severance package. I do not see how this actually has anything to do with the main problem.

Alan Greenspan does not force a lender to give money to someone without confirming repayment ability,if you take risks and they backfire, you take the heat. Simple

there you go pretending to know more than the people that started the shit

"Quite frankly, there was a race to lower standards to generate more loans," says a former mortgage broker with a major bank in the Chicago area. And for good reason: A merely "good" mortgage broker could easily take home $250,000 a year. But most of them were bringing in $500,000 to $750,000 as long as they cranked out enough loans -- and damn the consequences, says the former mortgage broker. "It was like kids in a candy store. You had to be a complete screw-up not to make money. There were basically no guidelines, no restrictions and no oversight."

-->Greenspan is the No1 culprit on the list!

Well, at least we in Naija don't have this problem.

unregulated capitalism. I dont know why financial experts speculators think that they are scientists. Finance is not like chemistry where Hyrogen and Oxygen give out water. they over-trusted their unproven formular. Subprime wahala. They cashed huge money from these trapped low income home owners and went on vacation thinking that every thing will be 'aight" By this time last year major, Wall Street banks were paying their executives billions of dollars in compensation for finding money they had no idea that it existed all in the name of profits.

Wait for another disaster with HEDGE FUNDS. Unregulated, off balance sheet actions, off Federal Reserve's oversight, off security and exchange commission. Believe what we tell you culture in Wall Street.

This should also make us to ponder on our investments in Naija's financial sector. All that glitters is not gold.