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| Version 0 | Version 1 |
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| Fed warns of $100bn credit losses | Fed warns of $100bn credit losses |
| (about 1 hour later) | |
| Federal Reserve chairman Ben Bernanke has warned that the crisis in the US sub-prime lending market could cost up to $100bn. | Federal Reserve chairman Ben Bernanke has warned that the crisis in the US sub-prime lending market could cost up to $100bn. |
| In a second day of testimony to Congress, Mr Bernanke said credit losses associated with sub-prime mortgage failures were "significant". | In a second day of testimony to Congress, Mr Bernanke said credit losses associated with sub-prime mortgage failures were "significant". |
| Wall Street is nervous about the exposure of banks and other lenders to the riskier sub-prime market. | Wall Street is nervous about the exposure of banks and other lenders to the riskier sub-prime market. |
| Earlier this month Bear Stearns bailed out two sub-prime focused hedge funds. | Earlier this month Bear Stearns bailed out two sub-prime focused hedge funds. |
| It has since said one of them has "very little value" and the other is now worthless. | It has since said one of them has "very little value" and the other is now worthless. |
| Downbeat note | Downbeat note |
| Fears that the downturn in the housing market will cause instability and retrenchment in the wider economy have grown in recent weeks. | Fears that the downturn in the housing market will cause instability and retrenchment in the wider economy have grown in recent weeks. |
| Mr Bernanke, in two days of testimony before US legislators, has sounded a persistently downbeat note on the state of the housing market. | Mr Bernanke, in two days of testimony before US legislators, has sounded a persistently downbeat note on the state of the housing market. |
| "The credit losses associated with sub-prime have come to light and they are fairly significant," Mr Bernanke told a Senate Committee. | "The credit losses associated with sub-prime have come to light and they are fairly significant," Mr Bernanke told a Senate Committee. |
| "Some estimates are in the order of between $50bn and $100bn of losses." | "Some estimates are in the order of between $50bn and $100bn of losses." |
| On Wednesday, the Fed revised downwards its forecast for annual economic growth, citing the impact of the housing slowdown on consumer spending. | On Wednesday, the Fed revised downwards its forecast for annual economic growth, citing the impact of the housing slowdown on consumer spending. |
| It has also said it expects the unemployment rate to rise from 4.5% to 4.75% by year-end. | It has also said it expects the unemployment rate to rise from 4.5% to 4.75% by year-end. |
| Despite the impact of the crisis in the sub-prime mortgage market, the US economy has performed better in the second quarter of the year than the first. | Despite the impact of the crisis in the sub-prime mortgage market, the US economy has performed better in the second quarter of the year than the first. |
| The economy has continued to create new jobs at a healthy clip while the number of unemployment benefit claimants is now at its lowest since early May. | |
| But the Conference Board, publishing its latest economic analysis on Thursday, said that it expected economic growth to slow in the next few months. | But the Conference Board, publishing its latest economic analysis on Thursday, said that it expected economic growth to slow in the next few months. |