Can some one add as to who are the major institutions who distributed the loans and which are the big names who bought the subsequent securities and lost.what happens finally to the the people who have distributed the loans and issued the securities. Are they not legally required to pay back the securities issued .
RE:sub prime and what it is.
by Fab Reens on Feb 06, 2008 04:00 PM Permalink
That's what the report says above that the banks relied on credit rating agencies and automated the process of doling out loans. Bond insurers too relied on the same evaluation data. In turn, credit rating agencies relied on data supplied by the banks. Nobody anticipated what would happen if the rates go up and home prices come down! Now the rates may have been lowered, but are people ready to buy at inflated prices. NO. So this vicious cycle would continue until (as usual) the pendulum would swing far out in the other direction and then correction would set in. Meanwhile, economy will be whacked out of shape. Don't forget credit card loans are going to be a major factor too as people have borrowed against inflated home prices.
