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U.S. financial crisis spreads toward your wallet

Banking woes, rising debt levels, and unemployment will put consumers in greater trouble, economists say.

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In 2006, well before the financial crisis broke on the shores of the American economy, Ann Lee wrote a 22-page paper on "Wall Street's House of Cards." It warned of the danger to the nation from the sale of trillions of dollars of complex financial products called "structured credit derivatives."

She watched as investment banks constructed and sold these paper investments that were supposedly backed by loans on houses, cars, businesses, and credit cards.

"Complete vapor money," she calls many of the derivatives. "Pretty much worthless."

With a Harvard Business School degree and 10 years experience on Wall Street, she quit as a trader for a hedge fund, hoping to expose the financial folly. "I was so disgusted with what was going on," she says

Since then she has taught corporate finance at Pace University in New York and this fall at China's Peking University. The $5 billion hedge fund where Ms. Lee had worked, Ritchie Capital, is headquartered in Lisle, Ill. [Editor's note: The original version made an incorrect statement about Ritchie Capital.]


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