Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street Highlight

In other words, the lenders were paying brokers to steer unsuspecting borrowers into more expensive loans that they had less of a chance of being able to repay. From the lenders’ perspective the economics were simple: because of higher interest rates and fees on subprime loans, they could resell them for a higher profit than they would earn on prime loans, and so were willing to pay brokers to generate more. The worse the mortgage was for the borrower, the more profitable it was in the short term for everyone else. As for the regulators, particularly the Federal Reserve, they had more or less abandoned any semblance of consumer protection during this time period and looked the other way at reported instances of predatory lending.