Financial Crisis Explained: Subprime Mortgage

Here's the first episode.

Category:

News & Politics

Tags:

• subprime
• mortgage
• crisis
• explained
• financial
• episode
• one
• gamejew
• jonathan
• mann

[MAADMO]

Should have re-named Scrooge McDuck to Scrooge McJew

[ootnitsuj]

It is quite puzzling how rating agencies can give triple-A rating to all these junk subprime loan backed bonds. And till today, investors are still paying so much attention to the ratings coming out from them. Can they still be trusted with their ratings?

[ootnitsuj]

@RichardKoenigsberg Subprime is kinda mean sub-class. Subprime loans are loans that are made to people without credit-worthiness. They totally skip pass the need to check if one is even able to repay the loan prior to the lending.

Kinda of layman explanation but hope you get what it means. ;)

[RichardKoenigsberg]

Very nice explanation: thank you. Stronger at the beginning than at the end. We need better explanation of precisely how things came down. Also, I'd like a clearer definition of the term "sub-prime."

[fluentinsilence]

"Dopah dopah dopah dooo. I'd like to take out a mortgage loan!" "Sure! Here you go!" Lol, yeah, that's pretty much how it went.

[chronthc1]

I like how the peons think it was the banks fault not congress who regulates them.

[iFullMetalJacket]

@bauer18 Subprime lenders (like Countryside) sold the loans to banks (non-depository banks, like Lehman Brothers) so that they could replenish their reserves (so mortgage lenders could keep lending). Investment banks like Lehman brothers took the crappy mortgages and paid rating agencies to AAA or BBB stamp them while hiding the really crappy mortgage loans off their books)=. These investment banks then bundled up these mortgages and sold them to investors (companies, commercial banks, etc)

[michaelwilde]

most people including Jonathan just gloss over the "borrower who took loans they knew they couldn't' afford". The borrowing class is just as culpable as everyone else in the chain.

[JimmyCheeseball]

@bauer18

The interest rates were high, meaning high returns for the companies. They would sell it on for a quick profit, whereas in the long run, it would be profitable for the end company because of the interest paid. It didn't matter if the people defaulted as well - that was desirable because house prices were rising so high that they would profit from acquiring and selling the house.