subprime

From: Lionel
Affiliation:
Address:
Date: 18 Feb 2008
Time: 07:40:20

Comments

I didn't see the Businessweek article, but it sounds like the subliminal message is that subprime was a failure of risk management, and now we are going to fix the problem--fix risk management. No, that is a cover up. The problem is the bank executives who knew subprime was a time bomb built of predatory lending practices. They knew there would be fallout some day, but they did a cost-benefit analysis comparing how subprime would enhance their immediate bonuses against how it would detract from their bonuses down the road. They liked what they saw and did nothing. Risk management was and still is so much talk built around a few computer models no one pays attention to.

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