The following is from the Dec. 2, 2007, edition of The Dallas Morning News. Scott MacDonald, an adjunct professor of finance at SMU's Cox School of Business and chief executive of the Southwestern Graduate School of Banking at SMU, explains subprime.
Business Columnist Cheryl Hall:
I don't know about you, but I let the problem of subprime loans snowball into a world-class crisis before I paid more than cursory attention to it.
As a result, I thought I knew the core issues, but I wanted to be certain that I did.
When you need a tutorial, you go to a tutor. So I turned to Scott MacDonald, an adjunct professor of finance at SMU's Cox School of Business and chief executive of the Southwestern Graduate School of Banking that's housed there.
Whew, that's a mouthful, but it sums up his credentials.
Here is Dr. MacDonald's primer on subprime:
What does subprime mean?
Subprime loans are loans to people with less than perfect credit. It's lending to people who may have dings on their credit report or maybe don't have the best credit score. Subprime loans are not necessarily bad. But when you add stupid terms that are not good for the lender or for the consumer, these mortgages become junk loans or even predatory.
What is a credit score?
Preset formulas that look at how well you've repaid debt in the past.
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