Who is responsible for the financial crisis? Lessons from a separation thesis

Abstract

Subprime mortgage was a kind of high-risk and high-interest lending, especially targeted at low-income and minority borrowers. The majority of subprime mortgage loans were made to non-affluent, low-income and poor borrowers who were previously unable to buy properties and might have poor credit histories (Pitcoff, 2003; Schwarcz, 2009). Why did mortgage lenders compromise their lending standards and dare to take obviously huge risks in mortgage lending? It is clear that the origin of the aggressive subprime mortgage practices were linked to the US Government's policy for increasing national homeownership and encouraging lenders to provide mortgage loans and other credits to low-income and minority borrowers, as a specific stakeholder group.

Citation

Sun, W. and Bellamy, L. (2010), "Who is responsible for the financial crisis? Lessons from a separation thesis", Sun, W., Stewart, J. and Pollard, D. (Ed.) Reframing Corporate Social Responsibility: Lessons from the Global Financial Crisis (Critical Studies on Corporate Responsibility, Governance and Sustainability, Vol. 1), Emerald Group Publishing Limited, Leeds, pp. 101-124. https://doi.org/10.1108/S2043-9059(2010)0000001011