Major bank will fail due to crunch, economist warns

20 August 2008

The credit crunch will worsen and another major bank is likely to fail as a result, the ex-chief of the International Monetary Fund (IMF) has claimed.

Kenneth Rogoff also said that the financial crisis - which is a major cause of the economic slowdown experienced by many countries over recent months - could only currently be at its "halfway point".

The crunch has already led to the collapse of US investment bank Bear Stearns this March, and UK mortgage lender Northern Rock last summer.

Collectively, banks have suffered around $400 billion of losses and writedowns since the onset of the crisis.

Mr 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.

He added: "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."

Mr Rogoff made the remarks at a conference in Singapore.

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