"match that lit a very dry field"

How Missed Signs Contributed to a Mortgage Meltdown

Business
How Missed Signs Contributed to a Mortgage Meltdown
By NELSON D. SCHWARTZ and VIKAS BAJAJ
Published: August 19, 2007
There were ample warning signs that a financial time bomb in the form of subprime mortgages was ticking quietly for months.

Exerpts:

As far back as 2001, advocates for low-income homeowners had argued that mortgage providers were making loans to borrowers without regard to their ability to repay. Many could not even scrape together the money for a down payment and were being approved with little or no documentation of their income or assets.

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“This was the match that lit a very dry field of risk on fire,” Mr. Malvey said. When he first heard the news coming out of Bear Stearns, Mr. Malvey recalled, he was busy writing his weekly report to clients in his corner office on the 15th floor of Lehman’s Midtown Manhattan headquarters. Now it seemed as if the broader market was catching up to what Mr. Malvey and his team had been talking about all along.

Comment: More on the subprime mess!