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  • What The Hell: “Subprime Lending Back”

    There is a tradeoff for such instant gratification: there always is – and we’re never prepared for it.

    You’ve got to be kidding me.

    America is not even close to being out of the recession, partly caused by subprime lending that was packed in CDO’s (credit debt obligations), and here we go again. This is the same thing that brought down institutional firms, Bear Sterns, Washington Mutual and Lehman Brothers: brought Goldman Sachs, Morgan Stanley, AIG, Bank of America and General Electric to the brink of collapse, while having devastating effects on the mortgage industry, the American workforce and created contagion within the global market.

    How does this happen? The regulators have been watching the rhetoric and activities of a few firms, and they have to see eerily – no creepily, similar circumstances to what was transpiring when American and global businesses first got into trouble with subprime lending. Who is watching the watchers, because no one with the right authority is outraged about this: someone has to have enough power – to be courageous enough to tell the truth, before America enters a second dip of the recession, and quite frankly, America is out of resources, while American leaders didn’t provide strong solutions for the first dip – we would have practically none for a second.

    This is hard to fathom: America is still very precariously stuck in neutral, and just a few bad quarters from freefall, and someone is going to have the political will to get this right. The other part: who are those folks still trying to buy “too much house?” I can be sympathetic to those, who were misled initially, due to this being such a permeating  and accepted wrong, but now we all know what we know – and anybody who gets stuck this time – is on their own.

    Alexander Eichler, in his Huffington Post article Private Investment Firms Lending To Subprime Borrowers Again, stated, “According to the WSJ, the firms draw a distinction between what they’re doing now and what took place during the run-up to the subprime crisis. They’re requiring higher down payments than banks would, and seem to believe they’re lending to borrowers who pose less risk than those who defaulted in large numbers a few years ago….In catering to borrowers with imperfect credit, the firms’ behavior is reminiscent of that of Ally Financial, which has been deliberately courting used car buyers with subprime loans despite concerns about risk.”

    I’m not shocked: I am disappointed. This is the very reason America might never become great again. It’s too ephemeral and too egotistical – to0 driven by greed and fame – and not value: it can only see the next few minutes, as opposed to the next twenty years, and there is a tradeoff for such instant gratification: there always is – and we’re never prepared for it.

    You have got to be kidding me.

    Good Luck.

    Calvin Wilson
    Founder and CEO
    Upstart: Business and Management for 20-40 Year Old Professionals

    Filed Under: Gamechangers


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