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Stacey Vanek-Smith: This week markets the one year anniversary of the credit crunch and the subprime lending crisis. This time last year, French bank BNP Parisbas closed two of its mortgage-backed investment funds. Banks stopped lending to each other. And The European Central Bank had to step in and pump more than $100 billion into the money markets.
The Federal Reserve in this country soon followed suit. Since then, banks have written off nearly $500 billion in bad investments. This morning, more of the same from Barclays of Britain. From London, Stephen Beard reports.
Stephen Beard: Another day, another $4.9 billion written off by Barclays — and profits 33 percent down. Not surprising, Barclays has been more heavily involved in rarefied financial products than most British banks. But what is surprising: the bank’s shares rose more than 5 percent on the news.
Analyst Richard Hunter says the figures were “better than expected.” And other recent results from British banks have also been less than catastrophic. Maybe, just maybe, the worst of the credit crunch is behind us.
Richard Hunter: As times goes on, as more of these bank reports come through, and as those vestiges of doubt slowly and one by one get removed it’s fair to say that there could well be some sign of a glimmer of hope at the end of the tunnel.
But confidence remains brittle. And what is clear: the world of credit has probably changed for good. Some of the world’s top banks have just drawn up a plan to restrict the complex financial products that helped trigger the crisis a year ago.
In London, this is Stephen Beard for Marketplace.
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