The latest turbulence in financial markets is being attributed to the rise in rates of subprime mortgages. Even delinquencies in loans to less-creditworthy home buyers besides sell of in Chinese stock market are being blamed for this downfall. A number of major investment banks had compiled the index of subprime mortgage values which started eroding in November and had a bad time in January too but it was only last week when it saw a rebound.
Subprime loan market has suffered on its own account due to conflicts of interests. A number of big banks selling subprime mortgages of disreputable mortgage brokers are lending to the same broker for covering their losses and if the bank refuses to give loan for bailing out the broker it will signal tough time ahead for everybody
Via chicagotribune
