VOA慢速英语2009年-THIS IS AMERICA - How a Housing Bubble Bur

VOICE ONE:

Welcome to THIS IS AMERICA in VOA Special English. I'm Steve Ember.

VOICE TWO:
　
A repossessed home in Denver, Colorado, in May 2008

And I'm Fritzi Bodenheimer. This week on our program, we examine some of the causes of the financial crisis.

ALAN GREENSPAN: "We are in the midst of a once-in-a-century credit tsunami¹. Central banks and governments are being required to take unprecedented² measures."

VOICE ONE:

That was Alan Greenspan last October at a hearing in Congress. He was chairman of America's central bank, the Federal Reserve, from nineteen eighty-seven to two thousand six.

Some people think the policies of the Greenspan years helped create the conditions for that "tsunami." But there are many players in the story of the financial crisis, a crisis that raised fears of a Second Great Depression.

At the heart of that story, though, is one thing: housing.

VOICE TWO:

Owning a home has long been considered part of the American Dream. To help finance homeownership, Congress created Fannie Mae and Freddie Mac. These two companies buy home loans. That way, the lenders have more money to lend.

Fannie Mae and Freddie Mac are called government-sponsored enterprises. Congress gave ownership to shareholders³. But the companies could borrow private money at reduced cost because investors⁴ believed the government would guarantee their debts.

Belief became reality last September. Both companies had too much debt and not enough capital to protect against huge losses. The government took control to prevent their collapse⁵.

VOICE ONE:

Fannie Mae and Freddie Mac own or guarantee more than five trillion dollars in home mortgages, around half the nation's total. They keep some as investments. But others are combined and sold as mortgage-backed securities.

Another government-sponsored enterprise, Ginnie Mae, created the first mortgage-backed securities in nineteen seventy.

Creating these securities became very profitable. Big investment banks even bought their own mortgage lenders.

But other lenders were happy to sell their mortgages. They could count the deals toward profit. And if the loans were not repaid -- well, they were someone else's problem.

Philip Budwick is a finance professor at George Washington University in Washington, D.C. He explains how lenders used to think about risk.

PHILIP BUDWICK: "In the old days, you lent out money, you kept that loan on your books, which means you had to have really tight risk management in place. You had to verify who the borrower was, their ability to pay, what kind of credit risk they were. And you were limited to how much money you could lend out based on your balance sheet."

Securitization grew, fed by investors’ hunger for high returns. Lenders, not surprisingly, became less interested in the quality of the loans they were making.

VOICE TWO:

But something else also changed in the years leading up to the crisis.

Growing numbers of homebuyers were people with poor or limited credit histories. The higher risk of these "subprime" borrowers meant that lenders could charge them more.

Many people borrowed more than they should have. There were borrowers who lied to get loans, and lenders who did not care. Banks and other lenders also began to offer products that borrowers did not always understand.

Buyers were able to make small payments for the first two or three years, often on loans for the full value of the home. Such plans can work -- as long as home values continue to go up.

And for years they did. Nationally, the S&P/Case-Schiller index of home prices rose one hundred twenty-four percent between nineteen ninety-seven and two thousand six. It was easy to believe that the sky was the limit.

(MUSIC)

VOICE ONE:

The addition of large numbers of subprime mortgages meant a bigger market for investors. Credit rating agencies rated many of these securities as high quality investments. The agencies are paid by the companies that issue securities.

But this was only the start. Investment banks created even more complex securities based on home loans and other debt products. Even their name is complex. Collateralized debt obligations were designed to offer investors different levels of return based on different levels of risk.

Many of these C.D.O.s had a form of insurance called a credit default swap⁶. Credit default swaps⁷ can protect bond buyers against losses. But some were being used to bet against a company's financial health.

The idea behind collateralized debt obligations is that they spread the risk among many investors. More than half a trillion dollars in C.D.O.s were sold in two thousand six. By then, however, the housing market had already started to collapse.

VOICE TWO:

The collapse started with the failure of subprime borrowers to pay their loans. Home foreclosures grew. And subprime lenders started to go out of business.

The trouble quickly spread to Wall Street investment banks. Hedge funds were next. These investment groups depend on borrowed money to buy long-term securities.

Among the hedge funds were two operated by the investment bank Bear Stearns. By July of two thousand seven, both funds were almost worthless. They had mainly invested in collateralized debt obligations. No one wanted to buy their C.D.O.s at anything near the stated value.

VOICE ONE:

Matthew Richardson is a finance professor at the Stern Business School at New York University. The failure of the two funds, he says, was a tipping point. It then became clear to investors that the housing bubble had burst. Mortgage-related securities were far riskier⁸ than anyone had believed, or at least had been willing to admit.

The following months brought concerns and suspicions about risky⁹ investments in so-called toxic¹⁰ assets. Banks became afraid to lend to each other. Credit markets froze. This set off a chain of events that threatened the whole financial system.

The system had grown more complex and interconnected, especially in the last ten years or so. A "shadow" banking¹¹ system had developed largely beyond the reach of rules for traditional banks.

These non-traditional bankers included investment banks, hedge funds, money funds and companies that insured debt like those C.D.O.s. They all had something in common: They were taking on huge amounts of debt and liabilities with very little capital left in reserve if things went wrong.

(MUSIC)

VOICE TWO:

By March of two thousand eight, thing really started to go wrong. Lenders cut off loans to Bear Stearns. And investors wanted to get their money out.

The Federal Reserve led by Chairman Ben Bernanke and the Treasury¹² Department under its former secretary, Henry Paulson, intervened. A thirty billion dollar loan from the government helped get JPMorgan to buy Bear Stearns.

Then, in September, Wall Street lost all four of its other big investment banks. The government persuaded Bank of America to buy Merrill Lynch. But officials decided¹³ not to rescue Lehman Brothers.

Lehman's failure not only became the biggest bankruptcy¹⁴ in American history. It also shook whatever trust remained in the markets, deepening the crisis.

The last of the investment banks -- Goldman Sachs and Morgan Stanley -- became bank holding companies. That change meant they were agreeing to accept greater supervision¹⁵.

VOICE ONE:

And what about that insurance we talked about earlier that was supposed to protect investors in the C.D.O.s? Many of the companies guaranteeing that debt did not have enough capital to pay claims when mortgage securities went bad.

A.I.G., the American International Group, was the world's largest insurance company. In a free-market economy, companies are supposed to be free to fail. But the government was aggressively trying to contain the crisis. It decided that A.I.G was "too big to fail."

A.I.G. and the bond insurers that guaranteed mortgage securities took the same chance that the investment banks did. They thought housing prices would continue to climb. In short, says finance professor Matthew Richardson, they made a bet without enough money in case they lost.

MATTHEW RICHARDSON: "So essentially¹⁶ we ended up with a two to three trillion dollar bet that was tied to the whole credit market, but especially to real estate. But no capital was underlying¹⁷ it."

VOICE TWO:

By now, the world's largest economy might not be in danger of "falling off a cliff." Yet it still faces a long climb out of a deep recession that began in December of two thousand seven.

Even so, the housing market has lately been showing some hopeful signs of new life which could help a recovery.

VOICE ONE:

The conditions that led to the financial crisis -- a housing bubble and too much debt -- were not new to financial markets. But today's globally connected financial system was new. That, combined with the complex yet supposedly safe products dreamed up by a new generation of financial engineers.

Finance professor Matthew Richardson at New York University sums it up this way:

MATTHEW RICHARDSON: "That’s the surprise of this crisis, is, you know, we’ve always believed that risk was being spread around the world. But, in reality, it was just concentrated at some big financial institutions."

(MUSIC)

VOICE TWO:

Our program was written and produced by Mario Ritter. I'm Fritzi Bodenheimer.

VOICE ONE:

And I'm Steve Ember. Join us again next week for THIS IS AMERICA in VOA Special English.

 

1 tsunami   

n.海啸

参考例句：

• Powerful quake sparks tsunami warning in Japan.大地震触发了日本的海啸预警。
• Coastlines all around the Indian Ocean inundated by a huge tsunami.大海啸把印度洋沿岸地区都淹没了。

2 unprecedented   

adj.无前例的，新奇的

参考例句：

• The air crash caused an unprecedented number of deaths.这次空难的死亡人数是空前的。
• A flood of this sort is really unprecedented.这样大的洪水真是十年九不遇。

3 shareholders   

n.股东( shareholder的名词复数 )

参考例句：

• The meeting was attended by 90% of shareholders. 90%的股东出席了会议。
• the company's fiduciary duty to its shareholders 公司对股东负有的受托责任

4 investors   

n.投资者，出资者( investor的名词复数 )

参考例句：

• a con man who bilked investors out of millions of dollars 诈取投资者几百万元的骗子
• a cash bonanza for investors 投资者的赚钱机会

5 collapse   

vi.累倒；昏倒；倒塌；塌陷

参考例句：

• The country's economy is on the verge of collapse.国家的经济已到了崩溃的边缘。
• The engineer made a complete diagnosis of the bridge's collapse.工程师对桥的倒塌做了一次彻底的调查分析。

6 swap   

n.交换；vt.交换，用...作交易

参考例句：

• I will swap you my bicycle for your radio.我想拿我的自行车换你的收音机。
• This comic was a swap that I got from Nick.这本漫画书是我从尼克那里换来的。

7 swaps   

交换( swap的名词复数 )； 交换物，被掉换者

参考例句：

• He swaps his old car for a new motorcycle. 他用旧车换了一辆新摩托车。 来自英汉 - 翻译样例 - 口语
• Swaps the anchor and end points of the current selection. 交换当前所选内容的定位点和结束点。

8 riskier   

冒险的，危险的( risky的比较级 )

参考例句：

• Now they are starting to demand higher returns on riskier assets. 而今他们开始在风险更高的资产上要求更高的回报。
• The problem with that: RIM's business is getting riskier every quarter. 不过问题也随之而来：RIM面临的业务风险正逐季增大。

9 risky   

adj.有风险的，冒险的

参考例句：

• It may be risky but we will chance it anyhow.这可能有危险，但我们无论如何要冒一冒险。
• He is well aware how risky this investment is.他心里对这项投资的风险十分清楚。

10 toxic   

adj.有毒的，因中毒引起的

参考例句：

• The factory had accidentally released a quantity of toxic waste into the sea.这家工厂意外泄漏大量有毒废物到海中。
• There is a risk that toxic chemicals might be blasted into the atmosphere.爆炸后有毒化学物质可能会进入大气层。

11 banking   

n.银行业，银行学，金融业

参考例句：

• John is launching his son on a career in banking.约翰打算让儿子在银行界谋一个新职位。
• He possesses an extensive knowledge of banking.他具有广博的银行业务知识。

12 treasury   

n.宝库；国库，金库；文库

参考例句：

• The Treasury was opposed in principle to the proposals.财政部原则上反对这些提案。
• This book is a treasury of useful information.这本书是有价值的信息宝库。

13 decided   

adj.决定了的，坚决的；明显的，明确的

参考例句：

• This gave them a decided advantage over their opponents.这使他们比对手具有明显的优势。
• There is a decided difference between British and Chinese way of greeting.英国人和中国人打招呼的方式有很明显的区别。

14 bankruptcy   

n.破产；无偿付能力

参考例句：

• You will have to pull in if you want to escape bankruptcy.如果你想避免破产，就必须节省开支。
• His firm is just on thin ice of bankruptcy.他的商号正面临破产的危险。

15 supervision   

n.监督，管理

参考例句：

• The work was done under my supervision.这项工作是在我的监督之下完成的。
• The old man's will was executed under the personal supervision of the lawyer.老人的遗嘱是在律师的亲自监督下执行的。

16 essentially   

adv.本质上，实质上，基本上

参考例句：

• Really great men are essentially modest.真正的伟人大都很谦虚。
• She is an essentially selfish person.她本质上是个自私自利的人。

17 underlying   

adj.在下面的，含蓄的，潜在的

参考例句：

• The underlying theme of the novel is very serious.小说隐含的主题是十分严肃的。
• This word has its underlying meaning.这个单词有它潜在的含义。