USA Today (8/15/07) has a succinct paragraph:
The troubles first surfaced in the subprime mortgage market, where borrowers with sketchy credit began defaulting on home loans they could not afford. The pain then spread to lenders who issued the bad loans. Then it infected a pair of high-profile hedge funds at Bear Stearns, which lost most of their value investing in risky, hard-to-trade bonds tied to subprime loans. Losses then showed up in European hedge funds. And this week the crisis tainted well-respected investment bank Goldman Sachs, which injected $3 billon into an ailing hedge fund run by computer models that were hurt by the violent moves in stock prices.
Wednesday, Merrill Lynch added to the angst when it raised the possibility that Countrywide Financial (CFC), the nation's largest mortgage lender, risks bankruptcy. Merrill issued a "sell" rating on the stock, kindling worries about the biggest U.S. home lender's ability to raise cash to secure short-term funds. Countrywide sank $3.17, or 13%, to $21.29.
Thursday, August 16, 2007
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