次信贷危机用英语怎么表达?

次信贷危机用英语怎么表达?
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Subprime Mortgage Crisis
Debt again
The mortgage crisis has surprising roots that go back decades. Why we need to rethink how we buy our homes.
By Robert Kuttner | August 19, 2007
THE SPIKE IN defaults on "subprime mortgages" has exposed underlying weaknesses in an economy built on too much speculative borrowing. It's not clear where all this will end, but for now credit is drying up for blue-chip corporations as well as high-risk mortgage lenders.
With financial tremors spilling over into the wider economy, major retailers like Home Depot and Wal-Mart are reporting softer sales as housing values decline and consumers put off discretionary purchases. Every investor, from retirees to university endowments, is at risk if the inflated stock market turns out to be another bubble. Even if the wider damage is contained, some 2 million mortgages are scheduled for rate increases this fall, and foreclosures are expected to soar.
What went wrong? President Bush recently blamed "easy money" and the failure of borrowers to read the fine print. A BusinessWeek cover story faulted home builders for overbuilding and then hooking up buyers with overly lenient mortgage lenders. The mortgage companies offering subprime loans blame the Wall Street financiers whose investments made the practice possible.
But in truth, the problem runs much deeper. The mortgage business has long been a tug of war between a social commitment to broad homeownership and the schemes of private financial operators looking to make a quick buck. In the wake of the Great Depression, the US government devised a strikingly effective system for bringing homeownership to the masses. Since the late 1970s, however, this system has been dismantled in the name of deregulation, causing a string of disastrous results.
The subprime mess is not so much a new crisis as a continuation of the saga that began with the savings and loan scandal of the early 1980s, when executives of S&Ls went on a risky lending binge with government-insured money. Then, as now, there are many individual culprits, but the real problem is the ideology of deregulation and the capture of public policy for private gain by the financial industry.
Homeownership is at the core of the American dream. Since the era of the American Revolution, owning property has been considered the mark of a solid citizen who is a stakeholder in the community. Mortgages enable ordinary people, who do not have the cash to buy a home outright, to join the propertied class. For most people, even today, their prime financial asset is the equity in their home.
The Republic's founders believed that a self-governing people needed to be a society of freeholders. President Jefferson sponsored a land-tenure system that largely kept the frontier out of the hands of land speculators, and favored yeoman farmers. With the passage in 1862 of the Homestead Act under President Lincoln, ordinary people could get title to 160 acres, free, if they worked the land. By 1900, in several western states, more than 60 percent of people were already homeowners.
In the early 19th century, immigrant, ethnic, and labor groups began creating "building and loan" societies, modeled on British cooperatives that originated in Birmingham in 1774. These mutual aid societies enabled people of modest means to pool savings and borrow money to build or buy homes. While these societies offered more flexible terms than banks, the typical mortgage was relatively short-term -- three to five years was common -- with much of the principal still owed at the end.
During the Great Depression, the wave of foreclosures inspired the Roosevelt government to invent the long-term, self-amortizing home loan. This innovation allowed the borrower to make fixed payments that pay off both interest and debt.
This new kind of mortgage was part of a larger strategy to spread homeownership, and protect the system from catastrophic failures. Congress first acted to insure mortgages, then established the Federal National Mortgage Association (FNMA) to buy qualified mortgages, replenishing lenders' funds to make more home loans. A system of Federal Home Loan Banks was established to supervise and loan money to local mortgage lenders. The government also created federal deposit insurance (the familiar "FDIC") to protect savers from bank failures, and restore confidence in the banking system.
Here was a stunningly successful system of social invention. The national rate of homeownership dramatically increased in the prosperous postwar decades, from about 44 percent on the eve of World War II to 64 percent by the mid-1960s. There were no notable scandals, few losses by lenders, and the government-sponsored systems of deposit insurance regularly turned a profit.
But any industry this big was bound to be irresistible to speculators. In several waves of deregulation, the industry managed to slip the bonds of government banking supervision. In each of these cycles, free-marketeers promised greater efficiency and more plentiful credit, if government regulators would just get out of the way. In each episode, however, the result has been increased speculation followed by huge losses and costs to the public, hurting the very people the mortgage system is supposed to help.
. . .
The first casualty was the savings and loan collapse. S&Ls, heirs to 19th-century building societies, had traditionally been staid and prudent institutions, mostly nonprofits with a social mission. As long as they maintained standards, few lost money. A well-worn industry joke called it the "3-6-3" system: take in deposits at 3 percent, lend out mortgages at 6 percent, and be on the golf course by 3 p.m.
But thanks to a lobbying blitz early in the anti-government Reagan era, Congress liberated S&Ls to speculate in far-flung ventures with no connection to their core mission of providing mortgages. Tiny S&Ls were allowed to become multibillion-dollar behemoths almost overnight, by offering premium interest rates on savings deposits. They then had to find riskier uses of the money to cover their higher costs. A lot of these loans went bad. Loan defaults and S&L bankruptcies ultimately cost taxpayers more than $200 billion.
In the subprime lending crisis that repeated the pattern two decades later, yet another form of deregulation was implicated -- the invention of "securitization" by investment bankers. That part of the story begins with the privatization of Roosevelt's FNMA.
In 1968, President Lyndon Johnson's housing aides decided to get FNMA off the government's books, in hopes that a private corporation could provide more liquidity for mortgages. Privatization of FNMA, rebranded as Fannie Mae, set the stage for other private players to get into the business of repackaging mortgages, which was no longer the province of a government agency chartered to act in the public interest.
In 1977, the investment-banking firm Salomon Brothers devised a highly lucrative financial daisy chain. Mortgages could be purchased from the originator of the loan, repackaged as bonds, sorted according to supposed risk, and certified by bond-rating agencies, thus allowing any number of investors to buy the bonds.
Securitization enabled subprime lenders to throw away the rulebook. As long as some investment bank could be found to buy the loan, convert it to a bond, and peddle it to someone else, the mortgage companies could still turn a profit.
In theory, this system makes mortgage credit more plentiful by funneling money from capital markets back to mortgage lenders and to borrowers, just as FNMA did beginning in the 1930s. But in today's privatized version, so many middlemen take cuts that home buyers are no better off.
The union of securitized mortgage credit and subprime lending was a marriage made in hell, waiting to be consummated. Once Congress sorted out the S&L mess, reregulating S&Ls in a 1989 law, more and more mortgage companies began doing end-runs around the regulations.
Most of today's biggest mortgage companies are actually subsidiaries of banks, such as Wells Fargo. While the loan portfolios of the parent banks are still strictly regulated, their mortgage subsidiaries are not, because the loans don't stay on their books. Other such companies are independent, but financed by big banks.
Many of these new-wave mortgage lenders, which make their profits based on their volume of loans, loosened credit standards far beyond the point of prudence, knowing that they could pass off the risk to some other investor. Between 2001 and 2005, the value of subprime loans soared from $50 billion to more than $600 billion, according to The Wall Street Journal.
Borrowers with poor credit histories were offered loans without a full credit check, often without income verification. Mortgage companies offered loans with no down payments and low "teaser" rates that became unaffordable once they rose to the market rate. About 15 percent of these loans, valued at about $67 billion, are already in default.
There was no government agency to temper these practices, since mortgage companies are exempt from federal regulation. Home buyers and lenders were both betting that appreciation in housing prices would allow early refinancings, or that equity windfalls would allow the borrowers to meet the payments. But when the housing market turned soft, they were blindsided. As super-investor Warren Buffett inimitably put it, "You don't know who's swimming naked until the tide goes out."
. . .
Thus the decline and fall of a once-sublime system of providing reliable mortgage credit for the American Dream. The industry has put a pretty face on its tactics, contending that it was virtuously helping less-affluent people become homeowners. But predatory lenders are a feeble substitute for a national homeownership policy.
Since the Reagan presidency, the federal government has largely gotten out of the business of subsidizing first-time homeownership. In the New Deal and postwar eras, moderate-income people got cheap, government-insured loans. Some veterans got direct loans reflecting the government's own low borrowing rate. In the 1960s, the Great Society directly subsidized mortages with rates as low as 1 percent. But this has all been drastically scaled back. Since 1980, the rate of homeownership among Americans age 25 to 34 has dropped from 53 to 45 percent.
The government should resume directly subsidizing starter mortgages and construction of homes for moderate-income buyers. These programs need to combine careful credit assessment with counseling, rather than relying on the tender mercies of the sleaziest wing of the private mortgage industry. It does no favor to aspiring home buyers when dreams end in foreclosure.
As for deregulation of mortgage lending, it's too late to head off this debacle, but Congress should act now to prevent the next one. Banks and S&Ls are regulated because taxpayer money is at risk through deposit insurance. Though mortgage companies do not take deposits, they too need to be regulated because their antics put the entire economy at risk. Irresponsibly speculative lenders should be prohibited from selling mortgages in the secondary market, even if they can find a consenting adult foolish enough to buy them.
My former boss, Senator William Proxmire of Wisconsin, sponsored the 1968 Truth in Lending Act, to require that interest rates be disclosed to borrowers in clear, consistent terms. The senator, who died in 2005, must be whirling in his grave. Today's mortgages are often convoluted and opaque, explicitly designed to mislead the borrower. We need a new Proxmire Act, to limit the bait-and-switch character of mortgages, and to police the secondary market in mortgage securities.
We've now had an experiment in the claims made for mortgage deregulation, extending over three decades, and deregulation flunked. America needs to restore a system in which government supports home- ownership -- and makes sure that mortgage lenders serve as responsible creditors, not predators.
Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos, a New York-based think tank. From 1975 through 1977 he was chief investigator for the Senate Banking Committee.