KEY POINTS:
PARIS - 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 yesterday, Merrill Lynch chief executive John Thain said 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 slowdown 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," Thain is quoted as saying.
Merrill Lynch has had to write off US$11.5 ($14.66) billion as a result of the sub-prime mortgage crisis and made a loss of US$8.6 ($10.96) billion last year.
- NZPA
