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There is a whiff of subprime in the spectacle.
As recently as 2001, just 8.6 per cent of the mortgage debt issued in the United States was subprime; in 2006, more than twenty per cent was.
Blackstone began betting against subprime in 2006, just as many home loans began experiencing trouble -- though firms like Merrill Lynch and Citigroup continued to dive into the mortgages.
European stocks have also been hard hit, and this has to do with relatively small amounts of subprime in some European banks.
(See "Subprime In Sheep's Clothing").
… You know, when you look back at subprime, in our case, you know, we were not in the subprime business.
Similar(51)
They sold derivatives in Delhi and originated subprime debt in Detroit.This model is in trouble for three reasons.
Given their thin capitalization and what is effectively a taxpayer guarantee, Fannie and Freddie had no business dabbling in risky subprime loans in the first place.
"Almost all their losses are in the subprime markets in America and related to the acquisition of the bank ABN-AMRO," he said.
The bailout, analysts said, was the latest indication that the turmoil that began in the subprime market in the United States had expanded into other areas.
With relatively risky debt, like securities backed by subprime mortgages, in disfavor in the market, the banks face the prospect of writing down some of their loan portfolios.
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