March 5, 2007
The Sub-prime Lenders Mess
Sub-prime lenders who securitized the loans (bundling them and selling them as debt securities) are in a bind (there stock prices have tanked) and the SEC, Department of Justice and many plaintiff lawyers are circling. This is not a market failure. If these folks oversold these collateralized debt securities with misleading claims, they will be held accountable to investors who have suffered losses.
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