Investment Review & Preview 2007-2008: Subprime Mess

Tuesday, January 01, 2008

Subprime Mess

The mortgage lending industry imploded in 2007. As part of NBR's annual "Investment Review & Preview" special airing January 1, 2008, correspondent Stephanie Dhue reports on the causes and effects of that collapse.

Table Detailing Mortgage Industry Write-Downs

Mortgage-Releated Write-Downs 2007 (as of 12/21/07)
UBS	$13.7 Billion
Morgan Stanley	$9.4 Billion
Citicorp	$9 Billion
Merrill Lynch	$7.9 Billion
Bear Stearns	$2.6 Billion

External Links/Articles*

• Federal Reserve
  The Federal Reserve is the central bank of the United States. This links to a May 17, 2007 speech made by Fed chairman Ben Bernanke title, "The Subprime Mortgage Market." Bernanke made this speech the same day the Fed and other regulators issued tighter underwriting standards for subprime loans.
• Freddie Mac
  Freddie Mac is a government-sponsored, "stockholder-owned corporation chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing." This links to a February 27, 2007 press release issued by the firm titled, "Freddie Mac Announces Tougher Subprime Lending Standards to Help Reduce the Risk of Future Borrower Default."
• International Strategy & Investment Group (ISI)
  ISI Group is is a broker-dealer focused on research. This links to additional information about Andy Laperriere, ISI's managing director of policy research in Washington, D.C. Laperriere is interviewed in Stephanie Dhue's report.
• National Community Reinvestment Coalition (NCRC)
  NCRC represents organizations dedicated to community reinvestment that is designed to help "traditionally underserved and vulnerable populations. NCRC's president, John Taylor, says the White House's plan to help struggling homeowners does not go far enough.
• New Century Financial Corporation
  As Stephanie Dhue explains in her report, subprime lender New Century filed for bankruptcy in 2007. The company's website currently offers information about its restructuring.
• Senator Robert Menendez
  As Stephanie Dhue explains in her report, Senator Menendez (D - New Jersey) has claimed the Bush Administration acted too slowly to counter the subprime mortgage crisis. This links to a May 17, 2007 press released titled, "Subprime Action from Congress Still Necessary, says Sen. Menendez."
• Senator Chris Dodd
  In August, Chris Dodd (D- Connecticut), chair of the Senate Committee on Banking, Housing, and Urban Affairs, called Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke together to discussion solutions to the crisis in the lending markets. This links to a press release detailing the conference.
• The White House
  This links to a December 6, 2007 fact sheet about the White House's plan to help struggling homeowners. As Stephanie Dhue mentions in her report, the plan contains the option of freezing interest rates for up to five years.

*Clicking these external links will take you off the NBR web site on PBS.org. NBR has no affiliation with these sites.