Subprime caused all kinds of pain. The costs of lending to people whose only chance of repayment was ever increasing house prices are still being paid today, years after the bubble burst. But even at the time I remember one commentator defending opening up the chance of home ownership to huge swathes of the population.
A snippet in an Economist article hailing the end of segregation in America's cities reminded me of this. Citing a report by the Manhattan Institute, a New York think tank, the magazine says American cities are more integrated than ever. "Only" 0.5 percent of America's 70,000 neighbourhoods are all white, and the proportion of black American living in "ghettos" has dropped from nearly half in the 1960s to about 20 percent. Anti-discrimination legislation, genrification, and access to credit (leading to depopulation of the ghettos) are behind the push towards integration. "The biggest drop in degregation over the past decade has been in places that had the most subprime lending," the report's author Jacob Vigdor is quoted as saying.
Visiting Maranello, the home of Ferrari, I remember reading a history of the company and its search for credit. Banks tend not to lend to the people who need it most, it said. We must hope that the era of tighter credit does not mean an end to opportunities for those with the most to gain.
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