Who Is to Blame for the Financial Crisis?

By Kate Barrett

May 6, 2009 9:11am

The Center for Public Integrity has a new study identifying the top 25 subprime lenders that helped start this economic meltdown.

Analyzing 7.2 "high interest" loans made between 2005 and 2007, CPI says the top 25 lenders were responsible for 72 percent of the high-priced loans made at the peak of the subprime market.

The 25 lenders are:

- Countrywide Financial Corp. (at least $97.2 billion in subprime loans)
- Ameriquest Mortgage Co./ACC Capital Holdings Corp. ($80.6 billion)
- New Century Financial Corp. ($75.9 billion)
- First Franklin Corp./National City Corp./Merrill Lynch & Co. ($68 billion)
- Long Beach Mortgage Co./Washington Mutual ($65.2 billion)
- Option One Mortgage Corp./H&R Block Inc. ($64.7 billion)
- Fremont Investment & Loan/Fremont General Corp. ($61.7 billion)
- Wells Fargo Financial/Wells Fargo & Co. ($51.8 billion)
- HSBC Finance Corp./HSBC Holdings plc ($50.3 billion)
- WMC Mortgage Corp./General Electric Co. ($49.6 billion)
- BNC Mortgage Inc./Lehman Brothers ($47.6 billion)
- Chase Home Finance/JPMorgan Chase & Co. ($30 billion)
- Accredited Home Lenders Inc./Lone Star Funds V ($29.0 billion)
- IndyMac Bancorp, Inc. ($26.4 billion)
- CitiFinancial / Citigroup Inc. ($26.3 billion)
- EquiFirst Corp./Regions Financial Corp./Barclays Bank plc ($24.4 billion)
- Encore Credit Corp./ ECC Capital Corp./Bear Stearns Cos. Inc. ($22.3 billion)
- American General Finance Inc./American International Group Inc. (AIG) ($21.8 billion)
- Wachovia Corp. ($17.6 billion.)
- GMAC LLC/Cerberus Capital Management ($17.2 billion)
- NovaStar Financial Inc. ($16 billion)
- American Home Mortgage Investment Corp.($15.3 billion)
- GreenPoint Mortgage Funding Inc./Capital One Financial Corp. ($13.1 billion)
- ResMAE Mortgage Corp./Citadel Investment Group ($13 billion)
- Aegis Mortgage Corp./Cerberus Capital Management ($11.5 billion)

Of note: At least 21 of these 25 lenders ere financed by banks that received federal bailout money. Citigroup has collected $25 billion TARP dollars; Wells Fargo $25 billion; Bank of America (which bought Countrywide and Merrill Lynch) $45 billion; and so on.

Also don’t miss "Predatory Lending: A Decade of Warnings," which shows how our leaders in Washington, DC, abdicated their responsibilities and enabled this crisis, ignoring warning alarms sounded for a decade.

One example: William Brennan, director of the Home Defense Program at the Atlanta Legal Aid Society, warned the Senate that lenders were making a lot of money by offering loans to people who couldn’t afford them, loans that would ultimately be bad for the Wall Street investors buying them up.

"I think this house of cards may tumble some day, and it will mean great losses for the investors who own stock in those companies," he told members of the Senate Special Committee on Aging.

In 1998.

- jpt

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