Mortgages are more than the U.S. financial sector can take by Corina Ciubotaru

America's economy is facing an unexpected crisis these days: the population has taken so many loans and mortgages on their homes that the banking system can't cope anymore. So the government began to pump money into the system, delaying the inevitable crisis, while banks increased the interests and gave clients higher rates to pay. And President Bush seems unaware of the magnitude of the problem. He will not allow Fannie Mae, the government-sponsored company that buys home loans from impoverished people, to pay $72 billion in mortgages and maybe save the financial world. Other countries already took action to prevent losses of their own due to American problems. BNP Paribas, France's biggest bank, has frozen $2.2 billion (1.6 billion euro) in three funds linked to the American subprime sector. The European Central Bank and the Bank of Canada have also injected funds into their systems, to help them deal with the high market fluctuations. Banks have now become cautious and may not decide to lend money as easily as they used to, even if they become available. The New York Fed has pumped dozens of billions of dollars in the hope of regaining stability but in the end it's a matter of waiting and seeing, as consumer spending in retail markets has slightly increased. On Monday, the Dow Jones industrial average fell 0.02 percent, to 13,236.53, while the Standard & Poor's 500 index fell 0.72, or 0.05 percent, to 1,452.92, and the Nasdaq composite index also fell 2.65, or 0.10 percent, to 2,542.24.

related story: http://news.yahoo.com/s/ap/20070813/ap_on_bi_st_ma_re/wall_street;_ylt=AuVJFXhs8RkY7L90.ZJMRxms0NUE

by Corina Ciubotaru for PocketNews (http://pocketnews.tv)

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