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Friday's Headlines: Europe debt mess could spark another 2008: GS executive

The world's financial system could slip into another crisis similar to the one experienced after the collapse of Lehman Brothers in 2008 if European debt problems escalate further, Goldman Sachs Asset Management Chairman Jim O'Neill told CNBC.

"This is where the parallels with 2008 are relevant, even though I think they are being over exaggerated," O'Neill said. "It was when the financial system really imploded that financial firms stopped extending credit to anybody that the corporate world had to destock and we know what happened after that. We are not far off the same sort of thing."

Equity markets have plunged this week as attempts by the Federal Reserve and leaders from the Group of 20 nations failed to assuage investor fears about another recession.

"The fear that it's all dependent on the Fed, together with this mess in Europe, is really getting people more and more worried as this week comes to an end," O'Neill said. "The markets have taken the latest FOMC move rather badly, which adds a whole new angle to it. It's the first time since the global rally started in early 2009 that the markets have rejected a Fed easing."

Other News:

US bank stocks plunge on concerns about liquidity and profits. [Financial Times]

Clearing House Association hires Citigroup CEO Pandit to chair supervisory board. [DealBook]

Bank of America strikes deal to sell $880 million in commercial mortgages, one of year's biggest. [Dow Jones]

Moody's cuts rating on eight Greek banks on fears about exposure to government debt. [Bloomberg]

European banks already had 420 billion euro recapitalization, stronger than before, EU says. [Reuters]

UBS wealth management CEO Robert McCann says wealth unit "stronger than ever." [On Wall Street]

Basel regulators mull changing capital surcharge rules for big banks. [Bloomberg]

Axa Rosenberg co-founder Barr Rosenberg charged of fraud for lying about faulty computer code. [On Wall Street]

Goldman Sachs appoints Greg Lemkau as head of M&A for EMEA and Asia Pacific. [DealBook]

Former SAC Capital Management trader Ali Akay wants to start hedge fund with help from Blackstone. [Bloomberg]

George Soros hits Forbes' top ten list of wealthiest American for first time. [Forbes]

Raymond James not interested in Morgan Keegan, says too much overlap. [On Wall Street]

South Korean financial sector in turmoil as regulators close seven banks and depositors protest. [Wall Street Journal]

Jefferies CEO Handler sells $25 million in company shares to pay off personal debt. [DealBook]

United Nations urged to tackle rules on speculative commodities trading. [DealBook]

China's Citi Securities chairman says Hong Kong IPO doing well despite volatility. [Reuters]

South Korea may increase stake in Bank of America with dividend investment. [Wall Street Journal]

AUTHORDalia Fahmy Insider Comment

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