Back when it became clear early this year that subprime mortgage lending had become a big mess, I sort of figured that the practices that had led to the mess would disappear pretty quickly. That’s the way financial markets work: They can go wildly overboard in one direction or another, but when it comes time to correct they at least do it quickly. But I guess what we’re learning is that the market for mortgage securities isn’t quite what we think of as a financial market–it’s riddled with opacity and ineptitude and assorted other inefficiencies.
There was evidence of this a couple of weeks when it came out that loans made in early 2007 were going bad at an even faster rate than those of previous years. And now there’s this, from an unscientific but very interesting poll (via e-mail from Andrew Schiff) of people planning to attend ABS East, a securitized lending conference:
56% described 2007 attempts to address unsound lending practices as “too little, too late,” while 16% thought that the industry had “done nothing” in 2007 to improve loan quality. Surprisingly 9% believed that lenders “dropped” standards in 2007. Only 19% described industry moves to address questionable loan criteria as “reasonable” or “bold.”