In light of the current financial crisis in the U.S. that
has sent ripples of effects on the world’s stock markets and economies, VOA-Lao
Service has sought comments and opinions of Lao-American banker John Norawong,
who is in a position to explain the situation and maybe offer advices to our
John Norawong is an Executive Vice-President of the Timberland Bank, based in Seattle, Washington. The interview took place after the Fannie Mae and Freddie Mac rescue and before Congress passed the $700 billion bailout package for troubled U.S. banks and financial institutions.
Explaining the banking system, John says most of the banks, once they lend people money, turn around and sell those loans to big financial firms such as Fannie Mae and Freddie Mac, Bear Sterns, AIG, and others. He adds, “The current problem dates back to 2-3 years ago when banks had a lot of money, so they lent money somewhat indiscriminately. And many people took out loans more than they could afford to pay back. Since the housing market has crumbled down, many homeowners who bought expensive houses that were beyond their means are now facing the trouble of not being able to pay back their loans.”
John further adds, “Personally, I think the bailout that the government is working on is a necessary move to stabilize the stock markets and create confidence in the financial market. Banks also need to have assurances to feel secure enough to lend money to people again and once this takes place, the markets will then flow again.”
"The economic meltdown and the financial institutions will take some time to recover and function as normally as before once the credit crunch has eased and banks start lending money to people and businesses once again. This is the hardest economic lesson that we all have learned in our lifetime," John concludes.
Listen to our interview with John Norawong for more details in Lao.