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2007 was undoubtedly an extraordinary year, as the market risks associated with the excessive boom in subprime mortgages exploded in August and spread rapidly, posing enormous challenges to the global financial system. Over time, more and more familiar names have appeared on the list of institutions that have lost money on subprime mortgage bonds, including HSBC, UBS, Citigroup, Merrill Lynch and Stanley.

Despite the fact that the European Central Bank, the Bank of Japan and the Federal Reserve have been pumping huge amounts of liquidity into the market and releasing liquidity in the form of lower interest rates, the situation is still not very optimistic. Wall Street investment banking giant Merrill Lynch posted its biggest quarterly loss in history in the third quarter, amounting to $2.24 billion. And now, although the fourth-quarter financial statements have not been disclosed, some analysts have pessimistically analyzed that Merrill Lynch will still lose money in the fourth quarter, and the amount may reach up to $3.24 billion.

On Christmas Eve, Merrill Lynch announced three sale plans, preparing to give up the ownership of Merrill Lynch to alleviate the financial dilemma it is currently facing.

This is not the first company to have a crisis over subprime mortgage bonds, but it is the first of Wall Street giants to hold on. Despite this, people are cautiously optimistic about Merrill Lynch's prospects, after all, such a giant with hundreds of billions of assets can still be brought back to life as long as enough money is injected.

While optimistic about the future, problems still exist and need to be resolved. Hopefully, things will turn out for the better, and the Fed, as the central bank, will not sit idly by. Although they have tried their best to save the market by cutting interest rates and injecting liquidity.

In late December, the Federal Reserve Committee submitted a reform package to the U.S. Treasury regarding the subprime loan storm, this time working with the Treasury to solve the problems in the market. They have realized that it may not be easy to reverse the current unfavorable situation by just relying on a change in monetary policy.

Washington dc. The Treasury building on the east side of the White House.

New Year's Eve, which was supposed to be a day off, was supposed to be a day off, but the three-story building was brightly lit and full of busy figures. At the entrance on the south side stands Alexander. Hamilton's statue, looking ahead in the light. One of the founding fathers of the United States and the first secretary of the Treasury in the history of the United States stood quietly, seemingly escorting the American economy and supervising the work of future generations.

In a high-level conference room on the third floor, Henry . Paulson looked silently at the statue of Hamilton downstairs. After being silent for a long time, he suddenly closed the curtains, turned back to the people who had been waiting at the conference table for a long time, and said, "Gentlemen, are you all here?" Let's get started! ”

When Paulson looked out the window, no one spoke in the room, not even gasping for breath. Everyone knows what to see from there. It is also clear to all what the current situation means.

The crimson oval conference table was already full of people. To be able to be at this time with Henry. Paulson's fellowship of the nation was a prominent figure in the financial system. Ben Bernanke, vice chairman of the Federal Reserve, vice chairman of Geithner, and chairman of the American Banking Association. Sennan. Bank of America CEO Kenneth Brown. Lewis, Stanley Chairman and CEO John Brown. Mark, Fannie Mae CEO Daniel. Mulder, Freddie Mac CEO David Murphy. Moffett ......

There are many elites gathered here, including the Ministry of Finance, the Federal Reserve, commercial banks, large real estate companies, investment banks, etc., and the content of the discussion is naturally how to rescue the real estate market. The subprime mortgage crisis that unleashed in August has affected commercial banks and financial institutions, and now the financial giants are desperate for the Treasury Department to step up and help them through the current crisis.

"Ben. What about consumer credit defaults in a few days? ”

Although the situation is already at the top of Tarzan, Henry. Paulson remained unfazed. It was only after he sat in this position that he realized how different his job here was from his job as CEO of Goodman. At Goodman, he was accountable to tens of thousands of employees and shareholders around the world, and now every decision he makes is accountable to the people of the United States. And always accept the difficulties from the market, so he was originally hot-tempered, and he gradually adopted his heart. And he also knows that despite the huge pressure, losing his temper and behaving abnormally will not bring any substantive effect at all, but will affect the feelings of the staff around him.

"Although the statistics have not yet been completed, judging from the existing numbers, the default rate has risen sharply, and the overdue repayment rate may reach the highest point in six years!" President of the American Banking Association, Ben. Sennan sighed lightly and replied with a blank face, "Maybe the situation will be worse, you have to be mentally prepared." ”

As soon as he finished speaking, everyone's faces changed, even Henry. Paulson is no exception.

It is well known that the root cause of the financial crisis was the bursting of the housing bubble, which in turn affected the repayment of loans secured by real estate, which Wall Street securitized into bonds and credit derivatives with varying ratings, thus bringing in large institutions and insurance companies that used bond investment as a means of investment. Therefore, if the real estate market does not recover, the crisis of the entire financial system will not be eliminated.

The fact now is that the overdue rate of mortgage repayments is likely to rise to an all-time high, which means that more homeowners are choosing to stop making payments, the situation in the mortgage market is further deteriorating, and the corresponding derivatives market is naturally not much better.

Root. After Sennan finished speaking, there was silence in the room. Although all of them are elites in the political and business circles of the United States, they alone or a combination of several companies cannot pry the real estate market in the United States. So soon, all eyes were on Henry. Paulson and Bernanke.

"The Fed will cut interest rates when the time is right and inject liquidity into the market again." Bernanke was similarly expressionless, "In addition, if necessary, we can provide liquidity support to companies in need of capital, but the amount will not be too large." Also, we are discussing a new rule on how to prevent risky mortgages, and while it is a remedial measure, we will do our best to save the market. ”

After speaking, Bernanke's brows were raised, and he spread his hands towards the crowd and made a helpless expression.

To be sure, the decisions made by the Fed so far have been effective. In September, November and December, they cut interest rates one after another and continued to inject liquidity into the market to alleviate the crisis. However, compared with the huge national real estate market and the larger CDO and CDS markets, the funds injected by the Federal Reserve are simply a drop in the bucket. (My novel "The Financial Son of the Great Era" will have more fresh content on the official WeChat platform, and there will also be a 100% lucky draw gift for everyone!) Open WeChat now, click on the "+" sign in the upper right corner to "add friends", search for the official account "qdread" and follow, hurry up! (To be continued......)