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How Many Lies Can the WSJ Pack into a Chart on Liar's Loans?

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Message William K. Black, J.D., Ph.D.
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The bubble was hyper-inflated by liar's loans, which grew much faster than non-liar's loan subprime from 2003 until mid-2007 when the markets collapsed. The percentage of subprime loans that were also liar's loans surged from 2003 until the collapse. Subprime loans that were not liar's loans actually fell in number in 2006 and the first-half of 2007. If you had to choose between "the subprime crisis" and the "the liar's loan crisis" the latter would be far more accurate. (I think that the phrase "nonprime crisis" is even better, for it includes all three categories -- subprime loans made with full documentation, liar's loans made to borrowers with subprime credit scores, and liar's loans made to borrowers with higher credit scores.)

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William K Black , J.D., Ph.D. is Associate Professor of Law and Economics at the University of Missouri-Kansas City. Bill Black has testified before the Senate Agricultural Committee on the regulation of financial derivatives and House (more...)
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