The Sub-Prime Mortgage Meltdown
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When the high-tech stock bubble burst, shareholders lost money. As the sub-prime mortgage market declines, people are losing their homes. We hear how it works, what can go wrong, and what it means for the rest of the economy. Also, Khalid Sheik Mohammed's confession continues.
In His Confession, Is Mohammed Exaggerating His Role? ()
Today's papers report the written confessions of the man who claims he was not only the mastermind of September 11, but also responsible for 30 other terror attacks and plans to attack. Khalid Sheikh Mohammed's confession was made at what's called a "combatant status review tribunal," held in secret last weekend at Guantánamo Bay. The Pentagon says part of his story was withheld to notify the family of the late Wall Street Journal reporter, Daniel Pearl. Mohammed says he was the man who beheaded Pearl five years ago in Karachi.
- Brian Jenkins: Senior Advisor to the President of RAND
- Vincent Warren: Executive Director of the Center for Constitutional Rights
Home Loans and Easy Money, until Times Get Hard ()
No less an authority than Alan Greenspan, former Chair of the Federal Reserve, called sub-prime mortgages a tool for democratizing credit. Sub-prime mortgages with no down payments are advertised as the road to home ownership for families who can't afford regular loans. They often gamble that they'll be able to re-finance after the house goes up in value, but before new interest rates and higher payments kick in. Now, with the housing market is cooling off, the formula is failing to work for more and more people. Foreclosures are up and they're likely to increase even more. Did stock analysts paint an overly rosy picture of the sub-prime mortgage market to generate investment? Do risky loans to millions of vulnerable borrowers threaten the whole economy? We hear from economists, consumer advocates, a state official who's going after shady lending practices, and John and Delia, two homeowners caught in the sub-prime squeeze.
- Paul Leonard: Director of the Center for Responsible Lending's California Office, @CRLONLINE
- William Galvin: Massachusetts Secretary of State
- Lloyd Segal: Mortgage banker
- David Shulman: Senior Economist with the UCLA Anderson Forecast
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