“Eventually I saw that all the subprime sectors were either being prepaid or going bad at an incredible rate,” said Vinny. “I was just seeing stunningly high delinquency rates in these pools.” The interest rate on the loans wasn’t high enough to justify the risk of lending to this particular slice of the American population. It was as if the ordinary rules of finance had been suspended in response to a social problem. A thought crossed his mind: How do you make poor people feel wealthy when wages are stagnant? You give them cheap loans.
