Posted on 05/13/2007 10:11:36 PM PDT by TigerLikesRooster
Exec warns of credit-bubble risks
By Warren Giles and Mark Pittman Bloomberg News
Article Last Updated: 05/10/2007 02:09:22 AM MDT
Zurich - Bank of America Corp. chief executive Ken Lewis said a so-called credit bubble is about to break after six years of historically low interest rates and relaxed lending criteria.
"We are close to a time when we'll look back and say we did some stupid things," Lewis said, speaking at a lunch at the Swiss-American Chamber of Commerce. "We need a little more sanity in a period in which everyone feels invincible and thinks this is different."
Demand for so-called junk bonds is close to its highest in a decade, while risk premiums are near their lowest level in a decade. Investors demand an extra 2.69 percentage points to own high-yield, high-risk securities instead of Treasurys, about 2 percentage points less than the spread's 10-year median, according to Merrill Lynch & Co. index data.
The spread on Feb. 22 came within 5 basis points of the all-time low of 2.44 percentage points, set Oct. 17, 1997.
Junk bonds are rated below Baa3 by Moody's Investors Service and BBB- by Standard & Poor's.
Another Bush Basher?
Of course, Bush could hurt politically if the whole thing unravel over his watch. Still the whole thing is much bigger than what Bush can handle. This is the work of world business community led by financial institutions.
It take a lot of brass to say that since B of A was one of the leaders in setting up housing mortgages for illegal aliens.
Good point. Also, the large, unstable and unpredictable dervivatives market is also their work. Buffet warned recently that the derivatives have become too powerful and can cause international havoc.
It take a lot of brass to say that since B of A was one of the leaders in setting up housing mortgages for illegal aliens.
This was a wise decision. They did not keep the loans but sold them to someone else. Just ask them.
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