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There has been much sorrow surrounding the meltdown of the subprime mortgage industry, but so far surprisingly little anger.
A story in today's Wall Street Journal may help change that. An analysis of more than $2.5 trillion in subprime loans made since 2000 shows that as the number of subprime loans mushroomed, an increasing proportion of them went to people with credit scores high enough to often qualify for conventional loans with far better terms.
This finding debunks the conventional wisdom that the subprime mortgage crisis revolves around borrowers with sketchy credit who couldn't have bought a home without paying punitively high interest rates.
In 2005, the peak year of the subprime boom, the study found that borrowers with decent credit scores got more than half - 55 percent - of all the subprime mortgages that were ultimate packaged into securities and sold to investors. By the end of 2006, it was 61 percent.
So why were all these people signing up for subprime loans who didn't need them?
One reason is the hard sell. Mortgage lenders had compensation structures that rewarded brokers for persuading borrowers to take a loan with an interest rate higher than the borrower might have qualified for.
These better-off borrowers may end up serving as a sort of "shock absorber" for the current mortgage crisis, since they are more likely than traditional subprime borrowers to survive the double whammy of declining home prices and adjustable rate mortgages soon due to reset at higher interest rates.
But it doesn't erase the fact that they got taken for a ride by mortgage lenders with questionable practices, and the American economy went with them.
Foreigners Entering U.S. To Get Full Fingerprint Scan
Hello, and welcome to the United States. As you may have read, it is customary for us to shake hands upon greeting. You may not have heard, though, about a new hand-based custom we have to welcome visitors here in America.
USA Today reports that this week the Department of Homeland Security will begin enacting its long-planned expansion of its border fingerprinting program - from two finger scans per arriving foreigner to 10.
Now visitors, please do not take offense! We are only this to make sure that you aren't terrorists.
The fun begins this week at Washington Dulles International Airport in Virginia, and will be spread to all the nation's airports by the end of next year, according to DHS. The federal government has spent $1.7 billion on the program.
The department has been collecting index-finger prints from foreign visitors since 2004 in an effort to make sure they weren't coming in with forged passports. It now has 90 million sets of prints.
The 10-print scanning will allow more thorough scanning against terrorist watch lists and possibly reduce the number of false positives, according to security officials.
An average of 70 people a day were stopped unnecessarily in 2004, the most recent data available, because their index prints matched a suspicious print. The new program should help eliminate that, officials say.
Privacy advocates, naturally, continue to fret about whether the government is really equipped to handle the awesome responsibility of having such a massive database of sensitive personal information.
But visitors, this is not the kind of thing you ought to worry about here during your stay. You should be enjoying our weak dollar and fast food. During your stay here, you will find that Americans are a very trusting people, so long as you are appearing in high resolution on their security monitors.
As FEMA Evicts, Homelessness Soars In New Orleans
Two things have doubled in New Orleans since Hurricane Katrina, reports the New York Times: the cost of rental housing, and the rate of homelessness.
The problem is that the federal government doesn't seem to be hip to the connection between them. About a month ago, workers from the Federal Emergency Management Agency tacked eviction notices on the doors of thousands of its trailers. But over two years after the storm, New Orleans is facing an acute shortage of rental housing that has nearly doubled the cost of rental units in the city.
That means lots of people who were renting houses for $300 before Katrina are never going to find anything close to that cheap today. "In New Orleans, decent affordable housing remains a casualty of the storm," write Times reporter Susan Saulny. And official attention to the shattered rental home and apartment market has been "scant," she writes.
Social service groups say about 12,000 homeless people are living in the city, about double the number before the storm. In the past several months, many of them have chosen to camp out on the steps of City Hall - partly because it is a safe open space, and partly because it's a political statement.
"FEMA and the federal bureaucracy seem oblivious to the fact that virtually no new affordable rental housing has yet appeared in New Orleans to replace what was lost," said Martha Kegel, executive director of United of Greater New Orleans, a group of 60 agencies that house and feed the homeless.
"To withdraw housing assistance to the neediest people is a shirking of federal responsibility for the design failure of the federal levees in New Orleans, which was the cause of the destruction of most of the affordable housing here."
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