Behind the boom, not just the bust
St. Louis Federal Reserve President William Poole says subprime loans -- blamed for the increasing deterioration of the housing market -- were a key reason the market boomed in the first place, Reuters reports today:
"This cycle was really quite different and the boom was driven importantly by the growth of the subprime market and the securitization of those markets," Poole told a monetary policy conference hosted by the St. Louis Fed in his honor."(It) all worked as long as house prices were rising -- and it all collapses when house prices stop rising. Obviously, this segment of the market, it is going to be a long time before it comes back," Poole said.
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