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A large US bank 'will collapse in months'

The worst of the global financial crisis is yet to come and a large US bank will fail in the next few months as the world's biggest economy hits further troubles, former IMF chief economist Kenneth Rogoff said on Tuesday.

  • Reuters
  • Published: 23:32 August 19, 2008
  • Gulf News

Singapore: The worst of the global financial crisis is yet to come and a large US bank will fail in the next few months as the world's biggest economy hits further troubles, former IMF chief economist Kenneth Rogoff said on Tuesday.

"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'," he said.

"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," said Rogoff, who is an econ-omics professor at Harvard University and was the IMF's chief economist from 2001 to 2004. "We have to see more consolidation in the financial sector before this is over," he said.

"Probably Fannie Mae and Freddie Mac - despite what US Treasury Secretary Hank Paulson said - these giant mortgage guarantee agencies are not going to exist in their present form in a few years."

Rogoff's comments come as investors dumped shares of the largest US home funding companies on Monday after a newspaper report said government officials may have no choice but to effectively nationalise the US housing finance titans.

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