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S&P Rates Subprime Mortgages Higher Than U.S.
- Thread starter redrumloa
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Quite frankly that's ridiculous. The backer for both debts is basically the same with one big difference.
The people paying the sub-primes generally are lower income - however, they are backed up, in the event of collapse apparently by the US government. That is the same government that all those lower income people pay taxes in (no, not federal income tax but they pay other taxes) and who perform work to create wealth in the US, but the US also has wealthy people to draw on to back it up.
So, the credit rating is lower for the asset which is more likely to fail because it is held by people viewed as less able to pay except that it is backed, quite likely by the US government but the rating for the ultimate backer (that same government) is lower? That makes absolutely no sense.
The people paying the sub-primes generally are lower income - however, they are backed up, in the event of collapse apparently by the US government. That is the same government that all those lower income people pay taxes in (no, not federal income tax but they pay other taxes) and who perform work to create wealth in the US, but the US also has wealthy people to draw on to back it up.
So, the credit rating is lower for the asset which is more likely to fail because it is held by people viewed as less able to pay except that it is backed, quite likely by the US government but the rating for the ultimate backer (that same government) is lower? That makes absolutely no sense.