Subprime

BeSpacific has a link to a paper written by sociologist Gregory D. Squires and published by the Economic Policy Institute that proposes that “Subprime lending and fringe bankers are concentrated in communities with high unemployment rates and declining housing values, and they serve to reinforce those neighborhood characteristics.” I suppose it doesn’t come as a surprise that more of these risky loans were made to people in riskier financial circumstances — that is, after all, what makes the loan “subprime.” The long-term effect of high foreclosure rates on homeowners and the communities in which they live is going to be troubling to watch and difficult, perhaps impossible, to stop.

A friend of mine passed on a link to this great little primer that explains how the subprime mortgage crisis got started, in stick-figure cartoon format. (Some strong language.) The only thing it’s missing is a few more panels where the borrower is told he’s in at least as bad a situation as the investor. If you’re looking for more a more formal and detailed review of the situation, there’s an article at Wikipedia.