“The mega-banks that funded the subprime industry were not victims of an unforeseen financial collapse as they have sometimes portrayed themselves,” said Bill Buzenberg, CPI executive director. “These banks were deliberate enablers that bankrolled the type of lending that’s now threatening the financial system.”
Analyzing computer-generated government data on close to 7.2 million subprime loans made from 2006 through 2007, the Center’s study also identifies the top 25 originators whose lending accounted for nearly $1 trillion–about 72%– of the high interest loans made during the period that ranged from the peak to the collapse of the subprime boom. At least 21 of the top 25 were financed by banks that received bailout funds–through direct ownership, credit agreements or purchases of loans for securitization.
And in a discovery that Buzenberg called “bizarre,” the study found that the epicenter of the profligate lending practices was Southern California, where nine of the top 10 subprime lenders were based.
The study results were released to the press last week in a Web- and teleconference presented by Buzenberg and John Dunbar, the Center senior fellow who headed the project. Naming names, the report calls the following lenders “The Subprime 25″and identifies the amount of their high-interest loans:
1. Countrywide Financial Corp.
At least $97.2 billion
2. Ameriquest Mortgage Co./ACC Capital Holdings Corp.
At least $80.6 billion
3. New Century Financial Corp.
At least $75.9 billion
4. First Franklin Corp./National City Corp./Merrill Lynch & Co.
At least $68 billion
5. Long Beach Mortgage Co./Washington Mutual
At least $65.2 billion
6. Option One Mortgage Corp./H&R Block Inc.
At least $64.7 billion
7. Fremont Investment & Loan/Fremont General Corp.
At least $61.7 billion
8. Wells Fargo Financial/Wells Fargo & Co.
At least $51.8 billion
9. HSBC Finance Corp./HSBC Holdings plc
At least $50.3 billion ***
10. WMC Mortgage Corp./General Electric Co.
At least $49.6 billion
11. BNC Mortgage Inc./Lehman Brothers
At least $47.6 billion ***
12. Chase Home Finance/JPMorgan Chase & Co.
At least $30 billion
13. Accredited Home Lenders Inc./Lone Star Funds V
At least $29.0 billion
14. IndyMac Bancorp, Inc.
At least $26.4 billion