Kenneth Rogoff, formerly the chief economist of the IMF, thinks the Credit Crunch may claim at least one more large bank “within months.” He also thinks Fannie (FNM) and Freddie (FRE) are toast. Speaking at a conference in Singapore, Rogoff said:
The US is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say the worst is to come. We’re not just going to see mid-sized banks go under in the next few months, we’re going to see a whopper, we’re going to see a big one — one of the big investment banks or big banks
Shares tumbled in Europe and Asia as a result of professor Rogoff’s comments. Rogoff went on to say that banks would respond to the crisis with an unprecedented wave of consolidation, and that GSEs Fannie Mae (FNM) and Freddie Mac (FRE) would cease to exist in their present form.
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