Credit crunch set to hamper US lending

US growth could fall by up to 1.5 percentage points over the next year as a result of tighter borrowing conditions, a report prepared for the US Monetary Policy Forum has found. The report also estimates the losses on mortgage securities will total $400 billion.

The paper finds that, in order to lessen the impact of the financial turmoil, banks should raise capital through new equity issues and retain cash by cutting dividends if necessary. Ministers of finance and central bankers may play a role

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