Mr. Frank McDonald:

The first signs of it were the sub-prime lending crisis in the United States, being constantly assured that the same situation did not apply here and there was no such thing as sub-prime lending, etc. In fact, that is what was going on. People were being lent much more money than they could afford to repay which is, by definition, sub-prime. That is what lay at the heart of the matter.

When we first got the warning signals from the United States, with Fannie Mae, Freddie Mac and whatever else all basically falling apart as a result of irresponsible lending, in effect the writing was on the wall. Except that here we were in denial that this was, in effect, what was happening - that money was being lent, on an unlimited basis, for overpriced assets.