Question
How did subprime loans lead to the current recession?
I'm doing a paper for my business class and have to explain how the subprime loans led to the current economic recession. Thanks!
5 months ago - 1 answers
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Sub-prime loans were created because Congress wanted more Americans to become homeowners. To do this they forced the large lenders to relax lending standards and create lending programs so that more people could qualify for mortgages. When the borrowers couldn't pay the mortgage, the foreclosure numbers started to rise. Then Congress said, "you nasty greedy lenders, you took advantage of these people". Congress created the sub-prime housing bubble, and when it burst, we all felt the shock wave.
Source(s)
Congressman Barney Frank
5 months ago
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