Ethical Issues of Subprime Loans
Resulting from high unemployment, inflation, and interest rates in the mid 1980’s leading to the third recession since 1973, consumer loan markets were closed as few consumers were able to pay the interest charged on mortgage loans. Loans were converted from fixed rate loans to adjustable rate lending products during the 1980’s to mitigate the risk of rising interest rates. This shifted the risk to the borrower instead of the lender (Hellwig, 2009). The Federal Reserve’s po
