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The 7% figure of bad subprime borrowers might be accurate, but, my understanding of what truly caused the market to melt down, is that the leverage that the fin
by blackrock 6y ago
The 7% figure of bad subprime borrowers might be accurate, but, my understanding of what truly caused the market to melt down, is that the leverage that the financial companies used, to package these poor mortgages into other investment vehicles, and mark them as AAA investment quality, is what ultimately caused the financial crisis.
Aka: shenanigans of the financial industry
- vmception 6y agoThe leverage is why it only took 7% of borrowers not paying to bring down the whole system. Banks were leveraged 40 to 1 and the value of their collateralized bonds fell a few percentage points, that's it. Yes, that is what our entire society is based around, the assurance that this doesn't happen.