What’s more, banks have made it very difficult to obtain a loan, imposing stricter regulations in checking a person’s creditworthiness. The cause of the credit crunch is linked to the American subprime mortgage crisis, which became apparent in the years 2007 and 2008. The bursting of the American housing bubble paved the way to a situation where borrowers were no longer able to pay back their loans, due to falling house prices and rising interest rates. Banks began foreclosure activities. During 2007, nearly 1.3 million U. S. housing properties were subject to foreclosure activity, up 79% from 2006. With regards to the crisis, major banks and financial institutions around the world have reported losses of approximately $435 billion in 2008.
The aftermath of the crisis is considered to be the worst ever in the history of the financial global markets. So far, a prestigious American bank, Lehman Brothers, has gone bankrupt, Merrill Lynch and two others have been taken over, and four, among them Fortis, have been nationalized. The stock markets reacted instantly, with high losses especially of bank shares. As for the commodity market, prices of oil shot up to $140 a barrel and then fell back to $100 as the dollar strengthened, while the prices of gold have significantly fluctuated. The American government has come up with a bail-out rescue plan of $700bn. This rescue package has been approved by the American Congress in order to relieve the US banking system of its mortgage debts. Will that help to stop the crisis? It is too soon to say. No doubt, mortgages will become more expensive and economic activity will be restrained as banks have less money to lend. Unemployment levels will rise until the economy picks up again. However, as with every crisis we just need to patiently wait it out.
[link=http://d52.rp.pl/audio/vol3/lekcja5.mp3]Wersja audio[/link]
[ramka][srodtytul]Practice makes perfect[/srodtytul]
[b]Complete the gaps with words from the text[/b]
