Could the U.S. be headed for a second sub-prime crash?
Average credit score of consumers approved for auto loans has shrunk every month since the first quarter of 2010
By Kyle Daly | 03.29.11 | 12:13 pm
The most succinct and uncontroversial explanation as to just how the recession began is that a massive surge in foreign capital in the early 2000s sent banks scrambling for investment opportunities and they found them by offering more loans to more people. This meant opening loans to consumers with a higher risk of not being able to pay them back — those being the sub-prime mortgages, which became a very familiar term in the early days of the recession. We’re still living through what happened next. And yet amazingly, data indicate that as corporations begin to recover, lenders in some markets are starting to return to the very pre-recession practices that created the crash in the first place.
The most succinct and uncontroversial explanation as to just how the recession began is that a massive surge in foreign capital in the early 2000s sent banks scrambling for investment opportunities and they found them by offering more loans to more people. This meant opening loans to consumers with a higher risk of not being able to pay them back — those being the sub-prime mortgages, which became a very familiar term in the early days of the recession. We’re still living through what happened next. And yet amazingly, data indicate that as corporations begin to recover, lenders in some markets are starting to return to the very pre-recession practices that created the crash in the first place.
posted by Dictynna @ 7:29 PM
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