US credit crunch “unbelievable”: Swiss central bank chief

GENEVA, Aug 19, 2007 (AFP) – Swiss central bank chief Jean-Pierre Roth sharply criticised the US economic system in an interview published Sunday, after the home loans crisis that caused turmoil on world financial markets. “Something unbelievable happened,” Roth said in an interview in the Swiss newspaper NZZ am Sonntag.

The chairman of the Swiss National Bank indicated that he did not foresee a swift end to the crisis triggered by the US sub-prime, or high-risk, home loan market in the United States.

Dozens of US mortgage lenders have been put out of business and major US and European banks have also taken a hit, making them more wary about granting new loans.

Roth told the newspaper that many questions remained unanswered, generating a high degree of volatility and mistrust.

“We’re certainly not at the end of the story with developments in the US mortgage market. The source is bad loans.”

“People there who had neither income nor capital got credit with very attractive conditions that could only be tightened with time,” he added.

Roth underlined that the situation was encouraged throughout the US economic system: from financial institutions that set up structured products covering such lendi