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Study: The Foreclosure Crisis: Did Wall Street Practice Predatory Lending or Did Households Overreach?

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The Foreclosure Crisis: Did Wall Street Practice Predatory Lending or Did Households Overreach?, April 2010.

  • “A new study by researchers in the Department of Finance at the University of Arkansas finds that household overreaching drove the foreclosure crisis. The authors find that most households in foreclosure were relatively affluent and highly educated people living in geographical areas that experienced extremely rapid real-estate appreciation. Predatory lending played a smaller role. The researchers are careful not to excuse Wall Street banks for their role in the crisis because reckless lending enabled households to become dangerously leveraged. An important implication of this study is that the Federal Reserve will have to get into the business of recognizing and limiting asset price bubbles.”
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