The problem, as Lanchester sees it, was: sub-prime mortgages.
After all, it was sub-prime mortgages that caused the financial crisis in the first place.
Much of RBS's loan book was sub-prime, which isn't an issue facing the bank's American subsidiaries, Dresdner analyst Ian Gordon said.
For it was sub-prime lending that created the housing bubble with it minimal or nonexistent qualifying criteria, such as the 'stated income', or 'no income' verification requirements of so-called Option ARMs that allowed minimal payments for the first 4 years, before payments rose enough to begin to pay down principal balance.
In 2006, 37percentt of all mortgage loans made in Philadelphia were sub-prime — made to people with poor credit histories — up from 20percentt in 2004.
Worse might be to come in other areas.One potential worry is sub-prime lending: loans to people with a bad credit history.
The huge reserves of coal, oil and gas held by companies listed in the City of London are "sub-prime" assets posing a systemic risk to economic stability, a high-profile coalition of investors, politicians and scientists has warned Bank of England's governor, Sir Mervyn King.
If you look at Prosper, the leader in P2P lending with more than $100 million in loans out so far, only 7percentt of its loans in October were sub-prime, despite their higher interest rates.
In general, a credit score of 720 or above is excellent; 675-719 is good; 620-674 is below average; and below 620 is sub-prime, meaning you'll have a tougher time finding a lender, and you're almost certain to get socked with a higher interest rate.
Nearly 15percentt of home loans were sub-prime according to the Mortgage Bankers Association.
The financial equivalent of reckless "Shock and Awe" has been "Sub and Prime".
