<P> H&R Block reported that it had made a quarterly loss of $677 million on discontinued operations, which included the subprime lender Option One, as well as writedowns, loss provisions for mortgage loans and the lower prices achievable for mortgages in the secondary market . The unit's net asset value had fallen 21% to $1.1 billion as of April 30, 2007 . The head of the mortgage industry consulting firm Wakefield Co. warned, "This is going to be a meltdown of unparalleled proportions . Billions will be lost ." Bear Stearns pledged up to U.S. $3.2 billion in loans on June 22, 2007, to bail out one of its hedge funds that was collapsing because of bad bets on subprime mortgages . </P> <P> Peter Schiff, president of Euro Pacific Capital, argued that if the bonds in the Bear Stearns funds were auctioned on the open market, much weaker values would be plainly revealed . Schiff added, "This would force other hedge funds to similarly mark down the value of their holdings . Is it any wonder that Wall street is pulling out the stops to avoid such a catastrophe?...Their true weakness will finally reveal the abyss into which the housing market is about to plummet ." The New York Times report connects the hedge fund crisis with lax lending standards: "The crisis this week from the near collapse of two hedge funds managed by Bear Stearns stems directly from the slumping housing market and the fallout from loose lending practices that showered money on people with weak, or subprime, credit, leaving many of them struggling to stay in their homes ." </P> <P> On August 9, 2007, BNP Paribas announced that it could not fairly value the underlying assets in three funds because of its exposure to U.S. subprime mortgage lending markets . Faced with potentially massive (though unquantifiable) exposure, the European Central Bank (ECB) immediately stepped in to ease market worries by opening lines of € 96.8 billion (U.S. $130 billion) of low - interest credit . One day after the financial panic about a credit crunch had swept through Europe, the U.S. Federal Reserve Bank conducted an "open market operation" to inject U.S. $38 billion in temporary reserves into the system to help overcome the ill effects of a spreading credit crunch, on top of a similar move the previous day . In order to further ease the credit crunch in the U.S. credit market, at 8: 15 a.m. on August 17, 2007, the chairman of the Federal Reserve Bank Ben Bernanke decided to lower the discount window rate, which is the lending rate between banks and the Federal Reserve Bank, by 50 basis points to 5.75% from 6.25% . The Federal Reserve Bank stated that the recent turmoil in the U.S. financial markets had raised the risk of an economic downturn . </P> <P> In the wake of the mortgage industry meltdown, Senator Chris Dodd, Chairman of the Banking Committee held hearings in March 2007 in which he asked executives from the top five subprime mortgage companies to testify and explain their lending practices . Dodd said that "predatory lending practices" were endangering home ownership for millions of people . In addition, Democratic senators such as Senator Charles Schumer of New York were already proposing a federal government bailout of subprime borrowers like the bailout made in the Savings and Loan crisis, in order to save homeowners from losing their residences . Opponents of such a proposal asserted that a government bailout of subprime borrowers is not in the best interests of the U.S. economy because it would simply set a bad precedent, create a moral hazard, and worsen the speculation problem in the housing market . </P>

How did the us housing bubble affect europe