Sunday, May 25, 2008

Shortest possible explanation of the Mortgage crisis.

The banks made loans that they then immediately sold in the form of securitized mortgages, so they didn't care about whether or not the borrowers could really repay. It turns out the borrowers couldn't.

The banks, pension funds, etc., then re-bought the securities based on the mortgages. Woops. Woops.

2 comments:

tamar said...

This may be longer, but it has pictures:

http://www.businesspundit.com/the-sub-prime-primer/

djinn said...

Totally kool! And Pics make everything better. Same story, though. BTW, thanks.