[TheAge] …While Der Spiegel claims that IMF intervention (my expression) is a humiliation for the US, the real significance may be that this is another blow to American exceptionism.
While the examination is far reaching, and deeply intrusive, Canada, Britain, Italy, indeed two-thirds of IMF members, have participated in the program. The new President will soon discover the age of US exceptionism is over. …
Les analystes du FMI sont très durs!
[FMI] The U.S. subprime loan virus IMF.ORG
There is nothing inherently wrong or reckless about lending to borrowers with lower incomes and lower credit scores. But prudence dictates that in making subprime loans, lenders must control the risks by more closely evaluating the borrower, setting higher standards for collateral, and charging rates commensurate with the greater risks.
Too often, however, standards were steadily loosened in recent subprime and « Alt-A » (whose risks are between prime and subprime) lending. Instead, many subprime mortgages were « ninja » loans—standing for no income, no job, and no assets. To make matters worse, many of these mortgages were issued with initially low « teaser » interest rates or with other terms, such as interest-only or negative amortization payment options, to make them seem more affordable to borrowers. This allowed borrowers to get larger mortgages, but created greater future payments for households when the teaser rate expired or principal repayments began.