Friday, September 26, 2008
The Liar's Loan
http://www.slate.com/id/2189576
Tracy gave me the above link - it's the loan I couldn't think of the name for. The nickname of Liar's Loan fits it well enough that the real name doesn't matter. More than 60% of these people overstated their income by MORE than 50%. The borrower knew about the lie. The real estate agent knew. The loan underwriter knew. Yet everyone turned a blind eye for years to land our economy in the mess it is in today. Today WAMU (Washington Mutual) a bank that has been around since 1889 went belly up - over 300 billion dollars in assets is by far the largest ever to go under. How did a financial institution of this size with 120 years of experience under the belt allow itself to get so deep into this mess it collapsed? If a bank of this size (well, it was a savings and loan actually, the largest one) has failed what others are on the horizon?
Tracy gave me the above link - it's the loan I couldn't think of the name for. The nickname of Liar's Loan fits it well enough that the real name doesn't matter. More than 60% of these people overstated their income by MORE than 50%. The borrower knew about the lie. The real estate agent knew. The loan underwriter knew. Yet everyone turned a blind eye for years to land our economy in the mess it is in today. Today WAMU (Washington Mutual) a bank that has been around since 1889 went belly up - over 300 billion dollars in assets is by far the largest ever to go under. How did a financial institution of this size with 120 years of experience under the belt allow itself to get so deep into this mess it collapsed? If a bank of this size (well, it was a savings and loan actually, the largest one) has failed what others are on the horizon?
