Quotes About Subprime

Home ownership was the fig leaf for the rise in subprime lending. But that was really about cash-out refinancings, not buying homes.

In the subprime mortgage industry, bankers handed out iffy loans like candy at a parade because such loans meant revenue and, hence, bonuses for executives in the here-and-now.

Instead of 6.7 million, the actual number was probably closer to 18 million, and, including Alt-A loans and loans backing PMBS, at least 31 million. Most of the missing subprime loans were on the balance sheets of Fannie and Freddie, which were hiding the numbers of subprime loans they had acquired to meet the affordable-housing goals.

In 2005 two thirds of the mortgages contained in Lehman's issuance of $133 billion in MBS/CDO were sourced from its own subprime loan originators. A top Wall Street name was scraping the very bottom of the credit barrel.

We never did these kinds of loans that really started this mess, the subprime loans. We just never got into that business. We were enticed a lot of times to do so by a lot of Wall Street-type players, but I, frankly, never understood some of this stuff.

Created by Congress as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the CFPB was a direct response to the financial crisis and ensuing Great Recession that began with the subprime mortgage debacle and the unraveling of Lehman Brothers investment bank.

Between the Community Redevelopment Act, requiring banks to make what I would call very weak loans, and specific quotas that the Congress imposed on Fannie Mae and Freddie Mac, that created the market demand that really led to the subprime phenomenon.

There have been a lot of critiques of the finance industry's having possibly foisted subprime mortgages on unknowing buyers, and a lot of those kinds of arguments are even more powerful when used against college administrators who are probably in some ways engaged in equally misleading advertising.

So now as always you could get AAA ratings, not for subprime mortgages, obviously bad, but for submarine mortgages, clearly much better! And the fact that all submarine properties were in some sense extremely subprime was not mentioned except as one aspect of the very lucrative risks involved.

Groups that work in black neighborhoods around the country have contended that much of subprime lending is 'predatory lending.'

I and others were mistaken early on in saying that the subprime crisis would be contained. The causal relationship between the housing problem and the broad financial system was very complex and difficult to predict.

I thought that there would never again be an opportunity to be involved with an industry as socially destructive and morally bankrupt as the subprime mortgage industry. I was wrong. The for-profit education industry has proven equal to the task.

Get-educated-quick schemes are usually about as sound as subprime mortgage-backed securities: Enticing but basically fraudulent.

In June 2005, mortgage rates were at 40-year lows, and risk premiums on mortgage securities were at all-time lows. Once the banks migrated to the subprime area, there was little else that could be done to send housing prices higher.

What the mortgage bubble was all about was big banks like Goldman Sachs taking big bundles of subprime mortgages that were lent out largely to low-income, highly risky borrowers, and applying this kind of magic-pixie-dust math to these bundles of securities and slapping AAA ratings on them.

The subprime disaster was a result of financial bombs - derivatives - exploding in financial institutions such as AIG and Lehman Brothers, as well as banks and financial institutions throughout the world.

By that point, of course, subprime lending had already virtually ended.

Steve's and my presentation proved wrong because we did not take into account the possibility that losses on subprime mortgages could ultimately destabilize both the U.S. and global financial systems.

Why the support for subprime lending?

although the European banks that eagerly bought securitized subprime loans were hardly blameless.)

As we sat in the afternoon sun, he gave me a quick tutorial on the burgeoning subprime mortgage market. Whereas banks had once typically held the mortgage loans they made in their own portfolios, a huge percentage of mortgages were now bundled and sold as securities on Wall Street. Since banks could now off-load their risk that any particular borrower might default on their loan, this "securitization" of mortgages had led banks to steadily loosen their lending standards.

Regulations don't solve things. Supervision solves things. If we could figure out that the subprime thing was a train wreck that was coming, where were the regulators?

Investigating some of the largest subprime lenders - Wells Fargo, Countrywide, Ameriquest, Household Finance - I've seen how their terrible, toxic loans were closed by any means necessary and eventually packaged, sold as securities, and bet upon until they exploded and decimated our economy.

If banks anticipate government will come to the rescue should the credit market go badly awry, they may make loans that would otherwise be imprudent, e.g. subprime loans with little prospect of repayment.