The Dramatic Racial Bias of Subprime Lending During the Housing Boom

#housing

Through a strange kind of logic – the sort that makes sense if you're a large bank at the height of the housing boom – high-income black households were actually the perfect customers for subprime loans. Black communities had long been ignored by banks, creating a void in the market for anyone pedaling these relatively new financial products. And subprime loans, while risky, were tremendously profitable (for the banks) when the homeowners didn't foreclose, thanks to their higher fees and interest rates.

"We might not be able to measure that impact for another five, 10, 20 years,"