A Crime of our times

Implications: Subprime crisis continues to precipitate.Property mortgage sector paying for the sins of unscrupulous lenders.

Analysis:  

Mortgage insurers MGIC and Radian have scrapped plans for merger announced in February this year at a time when the depth of the subprime crisis was yet to unravel.

Both had major plans to enter into other mortgage insurance markets including Australia, which have now come unstuck. However, MGIC which has a licence for the Australian market plans to start shop soon, on its own.

The fallout from the US sub-prime mortgage losses has hammered the share prices of the two insurers, with those of MGIC down 56 per cent and those of Radian down 70 per cent since the pair announced plans to merge.

Radian is planning to sell C-BASS, a subprime mortgage investment vehicle back to management with most of the investment written off.

An end to the subprime story is yet to be written. Perhaps, more ugly news from the mortgage sector is waiting to see the print. The subprime havoc has left a trail of losses in jobs, billions of dollars and an economic upheaval. What was needed, was a couple of whistleblowers at the time loans were being delivered without proper underwriting principles. Then the fallout could have been contained. It is now too late, like an atomic blast a subprime mushroom cloud hangs over the world markets and the toll no one wants to know. As it turns out, all the time spent in the classroom acquiring knowledge on financial management, lies today in a subprime heap. Real world is far removed from the classroom. A crime committed on the hapless minds.