《考研英語閱讀理解100篇 高分版》 Unit 15 - TEXT THREE

On November 4th Chuck Prince left the boss's office at Citigroup, the world's largest bank. A week earlier, Stan O'Neal lost his job at Merrill Lynch after leading the investment bank to a loss with $8.4 billion of write-downs. However churlish you may feel about Wall Street's new axiom—“the higher they fly, the bigger the parachute”—the departure of two of America's most senior bankers in a week is a good sign. Accountability, after all, is a step towards clarity, and there are few more coveted resources in today's fog-strewn and stormy banking industry. Both departures were accompanied by revelations of much steeper losses from American subprime mortgages than either Citi or Merrill had owned up to just weeks before. That attempt at honesty may have spooked the market because it showed how unsure the banks remain about how to value their subprime-related assets, but that is no reason to shy away from such disclosures.
Coming clean will be difficult, because for the time being the disclosures have provided more questions than answers. First, just how much do banks stand to lose? The latest confessions show that a whole new constellation of credit instruments, known as collateralised-debt obligations (CDOs), are far less secure than had been assumed even at the end of September. These include supposedly impregnable “super-senior” and AAA-rated tranches of CDOs that a short time ago were prized by the world's banks, insurance companies and mutual funds. In some cases their values have shrunk to a sliver of their original price since a series of downgrades by rating agencies last month. Citi, one of the biggest issuers of such CDOs, estimated this week that the losses on CDOs and other assets at other banks could reach $64 billion—to which its own potential write-downs must be added.
Second, do banks have enough capital to survive the crisis? At some institutions, mounting losses are making the cushions of capital held for times of crisis look increasingly threadbare. Wall Street firms and European banks use a special accounting provision for securities they consider hardest to value, which appears mainly to involve educated guesswork. On Wall Street the amount of securities in this category has ballooned and could easily wipe out the big firms' core capital if they were written down to zero—which is improbable but no longer thought impossible. To make matters worse, bond insurers, which rate America's $2.5 trillion municipal-bond market, are also up to their necks in CDOs. They were told this week that they might lose their coveted AAA ratings unless their shareholders provide more capital, which would cast a cloud over municipal bonds.
Third, how hard might the broader economy be hit? The flimsier the banks' capital base, the less freely they can lend to firms and households, putting both consumer spending and corporate investment at risk. Already there is evidence that credit conditions are tightening well beyond the housing market. A survey this week found that American banks have been tightening lending standards on everything from mortgages to commercial property to business and industrial loans. In Europe, too, credit conditions have tightened. In Britain the withdrawal of a bid for J. Sainsbury, a supermarket chain, by a Qatari-backed investment group was the latest sign that life has almost been squeezed out of the buy-out business.
1. Chuck Prince left the boss's office at Citigroup probably because _____.
[A] he was afraid that he was unable to prevent the company from continuing steeper losses
[B] he found there were few more coveted resources in banking industry
[C] he had already led Citigroup into enormous losses
[D] he was forced to leave the position because of poor management
2. Wall Street's new axiom—“the higher they fly, the bigger the parachute” means that _____.
[A] the higher the bankers' position, the bigger loss they will make
[B] the higher the bankers' position, the more influential their backstage bosses
[C] the higher the bankers' position, the safer they will be
[D] the higher the bankers' position, the more risks they will face
3. Which one of the following statements is TRUE of CDOs?
[A] “Super-senior” and AAA-rated tranches of CDOs were affected the most.
[B] It was CDOs that played the major role of Citi's tremendous losses.
[C] The earlier expectation far exceeded the actual security of CDOs.
[D] CDOs led to the devaluation of many companies in banking industry.
4. The author thinks the special accounting provision for the hardest securities adopted by Wall Street firms and European banks _____.
[A] is mainly composed of various speculations
[B] is based on unreliable experience
[C] is a trick played around by educated accountants
[D] has big problems that threaten to swallow big companies' core capital
5. By the abortion of the bid for J. Sainsbury, the author intends to imply that _____.
[A] foreign investment group has smelled the danger of investing in America
[B] the other business is also affected by the impact of American subprime mortgages event
[C] Europe's credit conditions are also facing great danger as affected by American subprime mortgages event
[D] credit conditions in Europe have also tightened