Letter
Fiscal meltdown deconstructed, again
December 15, 2011
Text size
–
+
IN THE Dec. 9 letter “Government, borrowers overreached, but lenders get blamed,’’ about Massachusetts’ lawsuit against major lenders, a reader asks: “What is wrong with this picture?’’ What is wrong is the reader’s facts. Before the financial meltdown, the vast majority of subprime loans were private. Banks’ computer models showed that more money could be made by lending to borrowers with poor credit at high interest rates than by lending to the creditworthy. Banks also engineered the offloading of risk onto other investors through an alchemy-like process that turned junk loans into AAA bonds. And thus, a few were enriched while millions of homeowners were injured.
For more from BostonGlobe.com, sign up or log in below
To continue, please sign up or log in to BostonGlobe.com
Access the full articles and quality reporting of The Boston Globe at BostonGlobe.com
Sign up
Unlimited Access to BostonGlobe.com for 4 weeks for only 99¢.
Are you a Boston Globe home delivery subscriber?
Get FREE access as part of your print subscription.
BostonGlobe.com subscriber
Click to continue reading this article or to log in to BostonGlobe.com.
