Mark Ernst, chief executive officer of H&R Block, said the dislocation of the U.S. home loan market could be the most severe since the Great Depression, the Times Newspapers reports.

His comments came after it become apparent that hedge fund Cerberus Capital Management is looking to reduce the $1 billion it pledged to acquire a mortgage division of H&R Block’s units, or possibly even squelch the deal, due to “material adverse market conditions.”

The division, Option One Mortgage Operations, has cut its lending business by 80% since the subprime crisis emerged. Previously, it lent $1 billion in mortgages a month. Now, that’s $200 million. Ernst said that if the deal falls through, H&R Block might fold the division.

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