Homebuyers were speculating with no money down. Mortgage brokers didn't care because they would sell the loans immediately and collect their fees. Wall Street didn't care because they could package the loans and sell them to investors. Investors would have cared, except they trusted the rating agencies. And as this article describes, the rating agencies weren't evaluating the underlying loans - they were performing statistical analysis using models based on lenders that cared if the borrower would repay the loan. At the same time, regulators - despite numerous warnings - mostly ignored the problem, apparently for ideological reasons ("let the free market work"). What a mess.The bottom line: nobody cared.
How to Explain the Subprime Crisis in an Email
I've found it extremely difficult to explain to people in just an email how subprime has wreaked such havoc the entire financial market. But CR over at Calculated Risk provides a great one-paragraph summary:
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