Director of Housing and Credit Policy, Consumer Federation of America
Director of Housing and Credit Policy for the Consumer Federation of America, an association representing 300 consumer groups from around the country
PROFILE
Allen Fishbein
Guest
FROM Allen Fishbein
To the Point
The Sub-Prime Mortgage Meltdown Continues When housing prices were going up, lenders were approving low interest loans to borrowers with questionable credit. The interest rates were "adjustable"--scheduled to go up, but before higher rates kicked in, homeowners could sell at a profit or re-finance their loans to get better deals. Banks and investment companies packaged the sub-prime loans and issued hundreds of billions of dollars worth of bonds. Now, the head of Merrill-Lynch is among those losing their jobs as Wall Street pays the price for over-investing in sub-prime mortgages. America's biggest home lender is helping borrowers to restructure their loans to avoid foreclosure, but home prices are still going down. The sub-prime debacle may cost $400 billion, twice as much as the savings and loan crisis of the early 90's, and two million people may lose their homes. Will there be a recession? Should the government step in or let borrowers and investors live with the consequences of risky decisions?
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