Subprime Mortgage Risk Is Still Keeping Economy Down
Tuesday, November 6, 2012
American Banker -- In a recent American Banker article, Rep. Carolyn B. Maloney asks what's hampering the economic recovery by referring to a recent speech by New York Federal Reserve President William C. Dudley that offers, among several other reasons, the "overhang of mortgage debt." What is this overhang, exactly?
Turn the clock back five years to the fall of 2007, well over a year after the subprime securitization machine had started grinding to an eventual halt. In late October of that year, Dudley, then executive vice president of the New York Fed, asked: "How did the problems in the subprime mortgage market — with losses that ultimately will probably turn out to be in the range of $100 to $200 billion — lead to such broad market distress?" (Full Story)