Home Loans made to borrowers with poor credit history, Lower Income Level and Unsure Employment Statue, Looking to buy a house and are prepared to pay interest rate 2% or higher than rates charged to people with good credit history.

Housing price in USA began to Drop in 2006. Rising interest rates &

falling housing price Led to rise in sub-prime

Mortgage delinquencies & resultant foreclosure.

To save the banks, the US government proposed a $700

billion bailout, which is a complex package of loans, and purchases of some of the toxic

debt.

Assumption That the Situation

Will remain theSame &

RefinancingWill be possibleExcessive use

of credit and debt leverage

Easy credit encouraged weaker borrowers toassume mortgages

FED lowered interest rates sharply since2001

Sequence of Events ForUS Sub-prime Crisis

Sequence of Events ForUS Sub-prime Crisis

Housing priceFall & rise inInterest rate

BorrowersDefault

IMPACT ON GLOBAL ECONOMYIMPACT ON GLOBAL ECONOMY

Credit got tighter -- banks became extremely carful parting with their capital and decreased lending activities either to business or to retail customers or even to each other.

World growth slowed down due to the global Crisis

Effect on Jobs – Employment has fallen by 3.6 million Since Dec. 2007.

12

0

20

40

60

80

100

India Russia Vietnam Ukraine China Chile Latvia

$988 billion in 2007

Source: World Bank

Source: Bangladesh employment & Training Affairs