Ten years after Lehman Brothers collapsed, high-octane products like those which led to the destruction of the American banking giant are making a comeback.
A decade ago Lehman heavily pursued subprime mortgage-backed loans, which were put into complex bundles obscuring their risk and value. This left the firm highly exposed to movements in the housing market and eventually triggered the biggest bankruptcy in US history.
These mortgage-backed securities which have become the most identifiable trigger for the financial crisis are now attracting fresh interest among investors. This is despite some market experts describing the housing market as a “bubble on a bubble”.
Nowt wrong with sub prime mortgages as long as they’re priced right. And as long as the holders aren’t leveraged banks.
What’s the problem?