Subprime lending, a growth niche that just a year ago banks were tripping over themselves to buy into, may soon be a business nobody can afford to touch.
Under fire from vote-hungry politicians and facing lawsuits on several fronts for their business practices, subprime lenders may also soon find funding tougher to raise as government and activist lawyers increasingly look to hit the companies at their sources of funding - the banks that buy and securitize their loans. In the process, some bankers wonder whether anyone can profitably lend to low-income borrowers, whose riskier credit records call for higher returns. Though lending discrimination and abuses have always been an issue, attention has increased noticeably in recent months. Experts cite political grandstanding, the boom in subprime lending, and other factors.