the VOA Special English Economics Report.
lawmakers and law enforcers are busy with the housing finance market.
the recent problems were caused by subprime mortgages. These highly profitable
loans were marketed to risky buyers and then sold to investors. But even
homeowners with good credit are having trouble with other new kinds of loans.
bill could help some people get lower-cost loans. It would let the government
guarantee three hundred billion dollars in new financing.
first big sign of problems with mortgage investments, which led to a worldwide
credit crisis, came last summer. Two funds of the Bear Stearns investment bank
collapsed. They were heavily invested in risky home loans. Investors lost
almost one and a half billion dollars.
week, the Justice Department announced charges against the two men who led the
hedge funds, Ralph Cioffi and Matthew Tannin. Officials say that by March of
last year, the managers believed the funds were at risk of collapse, but lied
to keep investors from leaving. Both men have pleaded not guilty.
the Justice Department and the Federal Bureau of Investigation announced the
results of Operation Malicious Mortgage. That investigation led to more than
four hundred arrests in the last three months.
people were charged with mortgage-related misrepresentations and other criminal
abuses. The F.B.I. estimates that these mortgage fraud cases resulted in about
one billion dollars in losses.
said nineteen companies were being investigated in connection with subprime
loans. They included mortgage lenders, investment banks, hedge funds,
accounting companies and credit rating agencies.
week, the Securities and Exchange Commission proposed new rules for credit
rating agencies. The aim is to reduce the dependence of money managers and
investment banks on credit ratings as a measure of risk.
say credit rating agencies seriously underestimated the risk of many mortgage-related
And, shareholders in the nation's largest mortgage
company, Countrywide, agreed Wednesday to sell the company to Bank of America.
Countrywide has lost billions on bad loans, and its lending activities are the
target of lawsuits. Also, there are accusations that some lawmakers in Congress
got special treatment on loans through its chief, Angelo Mozilo.
that's the VOA Special English Economics Report, written by Mario Ritter and
online at voaspecialenglish.com. I'm Jim Tedder.