Magazine
Latest Issue

A matter of facts

The simple business of losing a trillion

How has so much money been lost in the credit crunch? In essence, it is simple. In the US, over one trillion dollars were lent by financial institutions to house buyers whose income and job prospects were relatively poor. These sub-prime mortgages were then bundled together and sold in the form of mortgage-backed securities. The purchaser of bundles of such securities gained a high rate of return because sub-prime borrowers, being riskier prospects for lending, are charged high rates of interest.

So how risky are these bundles of sub-prime mortgages? This is hard to tell but, luckily (or perhaps not),…

Register today to continue reading

You’ve hit your limit of three articles in the last 30 days. To get seven more, simply enter your email address below.

You’ll also receive our free e-book Prospect’s Top Thinkers 2020 and our newsletter with the best new writing on politics, economics, literature and the arts.

Prospect may process your personal information for our legitimate business purposes, to provide you with newsletters, subscription offers and other relevant information.

Click here to learn more about these purposes and how we use your data. You will be able to opt-out of further contact on the next page and in all our communications.

We want to hear what you think about this article. Submit a letter to letters@prospect-magazine.co.uk

More From Prospect