The Start of Subprime

Here is an article that was forwarded to me from September 30, 1999 in the New York Times. It depicts the moves Fannie Mae made in order to extend lending to individuals "whose credit is generally not good enough to qualify for conventional loans." In essence it represents the begining of subprime.

Here is the key paragraph:

"In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's."

The full article is well worth the read: http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=1

Thanks for the heads up Noah.