Sean’s Blog

This American Life has a really great episode about how the subprime mortgage crisis happened. Since I had gone through the loan process myself (although for a 30-fixed), I though I had some idea of how it worked. What I didn’t understand is how people could borrow money that they new they couldn’t afford.

What the show did a great job of explaining is how many different forces contributed to a perfect storm that brought down Wall Street giants and individual home owners. Blame seems to fall every where. The borrowers taking loans that they new they couldn’t afford. The mortgage companies selling NINA (No Income No Asset Verification) loans. The brokers calculated the risk for mortgage back securities with data that was so out of data as to be meaningless.

In the end, the result was so inevitable that it couldn’t turn out any other way. People who should have known better at all levels fell victim to the quest for more money. Give it a listen. It is really informative.

This American Life’s Giant Pool of Money* _{tip of the CDO to JD at Get Rich Slowly}

*According to the site it is only available for a few more days (May 18th)