The Subprime Loan Machine: Software to Screen Home Buyers(nytimes.com)
nytimes.com
The Subprime Loan Machine: Software to Screen Home Buyers
http://www.nytimes.com/2007/03/23/business/23speed.html?ex=1332302400&en=6f66aa60bde29224&ei=5090&partner=rssuserland&emc=rss&pagewanted=all
9 comments
The linked article should be taken in context -- it was published almost a year ago, when the public attitude about lending practices was quite different (and the nytimes does tend to reflect and follow public attitudes). For a sense of the period, look at this review of Senate Hearings on lending practices published the day before: http://www.nytimes.com/2007/03/23/business/23lend.html
"codewhisperer" - lol
Wish I would have thought of that.
Wish I would have thought of that.
This reminds me a little bit of what the younoodle guys are trying to do, but applied to a different domain.
This is a more "real" application of the technology then YouNoodle. Although on the abstract it is the same idea.
They're just now doing this?
It's a story of how the mortgage industry took to computer models over time (and how they were abused in the subprime mess).
It's more than that, though -- if you look at this in the context of generic data projection and 'intelligence amplification' software, some (perhaps positive) aspects of the subprime boom were logical outgrowths of more powerful tools for reviewing borrower credit histories.
And some of the hugely negative aspects of the subprime mortgage market (and resulting credit crunch) were logical outcomes of Wall Street's insane greed, coupled with derivative financial instruments that allowed risk to be packaged as CDOs without due diligence or oversight. Give Wall Street a loophole (hell, give any poorly regulated industry a loophole) and the outcome is predictable. Couple the loophole with automated tools that allow irresponsible people to conduct transactions in the blink of an eye -- an unsupervised ML project, as it were, with an algorithm appropriate only for supervised learning -- and you get a massive financial shockwave...
This is not entirely different from the computer-trading aspects of Black Friday, but due to the lax oversight of the fundamentals, it will likely have much longer-lasting aftershocks. It's unclear whether our next president will have the character to fix the underlying problems, but as usual, the tools have no morals -- it is only their users. And I've never seen any indication that a moral being can survive on Wall Street, at least not en masse.
And some of the hugely negative aspects of the subprime mortgage market (and resulting credit crunch) were logical outcomes of Wall Street's insane greed, coupled with derivative financial instruments that allowed risk to be packaged as CDOs without due diligence or oversight. Give Wall Street a loophole (hell, give any poorly regulated industry a loophole) and the outcome is predictable. Couple the loophole with automated tools that allow irresponsible people to conduct transactions in the blink of an eye -- an unsupervised ML project, as it were, with an algorithm appropriate only for supervised learning -- and you get a massive financial shockwave...
This is not entirely different from the computer-trading aspects of Black Friday, but due to the lax oversight of the fundamentals, it will likely have much longer-lasting aftershocks. It's unclear whether our next president will have the character to fix the underlying problems, but as usual, the tools have no morals -- it is only their users. And I've never seen any indication that a moral being can survive on Wall Street, at least not en masse.
please RTFA before commenting; it's a good article and the creator of the software contributes a particularly arch comment at the end.
Automated unstructured information processing is the wave of the future, and it always will be ;-) (as used to be said of parallel computing, and perhaps still should be)
Automated unstructured information processing is the wave of the future, and it always will be ;-) (as used to be said of parallel computing, and perhaps still should be)
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