The Subprime Virus Reckless Credit, Regulatory Failure, and Next Steps

• Many people ask the authors: how did this happen? Where was the government? Did you see this coming? And, what can be done? The book answers these questions.
• The book sits between somewhere between journalism and academic scholarship and will be accessible to people who are curious about various social and economic phenomena and look to academic crossover books for deeper knowledge. These people want an overview of the subprime crisis, without having to immerse themselves in technical, academic articles. The broad arc of this book will serve that need.
• One feature of the book is truly unique: the description of regulatory failure. No other book provides a comprehensive description or analysis of the federal government's regulatory failure in the subprime crisis or how the government could have prevented the crisis.
• The book challenges the myth that the subprime crisis was a "perfect storm" that could not be foreseen beforehand.
• The book covers the first year of the Obama presidency's response, which other books do not.
• As law professors and lawyers, the authors' analysis and solutions are grounded in a rich understanding of how the law can be used to prevent a repeat crisis.

In this lively new book, Kathleen C. Engel and Patricia A. McCoy tell the full story behind the subprime crisis. The authors, experts in the law and economics of financial regulation and consumer lending, offer a sharply reasoned, but accessible account of the actions that produced the greatest economic collapse since the Great Depression. The Subprime Virus reveals how consumer abuses in a once obscure corner of the home mortgage market led to the near meltdown of the world's financial system. Wall Street peddled subprime loans to investors through complex but dodgy financial instruments that spread like a virus. A central theme in the book is the role of federal banking and securities regulators, who were well aware of lenders' risky, deceptive mortgages and of Wall Street's addiction to high stakes financing. These regulators, believing that markets would self-correct, did nothing until the crisis erupted. While the spread of the subprime virus resulted from economic and political failures, its lessons inform the building of a new, more stable, prosperous and just financial order.

Readership: The Subprime Virus will appeal to a number of different audiences. This is because the book, like the subprime crisis itself, cuts across multiple disciplines. Academics and researchers in the fields of law, finance, economics, political science, geography, urban studies and sociology will have an interest in the book. Similarly, the book will inform the research and policy proposals of government officials and policy-makers at organizations ranging from the International Monetary Fund to the Securities and Exchange Commission. The book will also appeal to a more general audience of public-minded readers who want explanations for the subprime debacle. Based on the extent to which Engel and McCoy's earlier articles on subprime lending are assigned as course readings in law, business, and urban studies schools, they are confident that faculty from an array of disciplines will adopt the book. In the law school curriculum, the book could be used in courses on consumer law, banking law, securities law, financial services regulation, poverty law, property law, real estate law, and commercial law. In business schools and in undergraduate economics departments, the book could be valuable in microeconomics, macroeconomics, real estate economics, urban economics, finance, and business law courses. Similarly, sociologists, urban geographers, and faculty in public policy and urban planning schools might use the book in courses on community development and housing policy.