sub-prime lending

the other day, when I admitted that I didn’t understand exactly what this whole sub-prime lending situation was, someone convinced me that the loans were being made at lower than the prime rate (sub-“prime rate”).  that sounded absurd to me — how could a bank loan at less than the incredibly low interest rates that were available to prime borrowers?  convinced is a strong word — I objected, and they persisted, so I stopped arguing with them (A HA!  I shouldn’t have caved — may that be the last time I ever do THAT!)

anyways, as Wikipedia sayeth:

The term “subprime” refers to the credit status of the borrower (being less than ideal), not the interest rate on the loan itself.

alas, I didn’t have Wikipedia available when I was having that discussion.  am I the only guy that wishes I had the Internet available in my peripheral vision at all times, just like the Terminator and his heads-up display?  that should be available soon enough, I imagine.

more on why we shouldn’t bail out the subprime debacle by the chief economist at the Waffle House (??!?)…


1 Comment

Filed under economics, finance, freedom

One response to “sub-prime lending

  1. Kevin

    Bailing out homeowners who are over their heads kind of reminds me of a proposal to sell the homeowners in Katrina flood insurance only after the fact.

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