Subprime:

Subprime loans are no-prime loans or the loans at high risk.

• Institutions provide high interest loans to people who have low credit scores. These loans run into high risk in difficult market times such as credit crunch of 2008.
• Subprime mortgage loans are similar in risk profile as subprime loans mentioned above.
• Late 2006, subprime mortgage industry entered what observers refer to as meltdown.
• Lowering house prices over several years made people default on the loans
  Steep rise in rate of subprime mortgage defaults and foreclosures caused more than 100 subprime mortgage lenders to fail or to file bankruptcy.
  
  Why Subprime hit other markets?
  
  US Banks and lending institutions had repackaged the subprime debts and sold these as attractive securities and investment engines that were snapped by EU and Asian markets.
  
  
• So when crisis hit subprime mortgage industry, those who had bought into these so called growth engines found their investment valueless.
• Unable to assess values of such properties led to uncertainties and banks stopped lending to maintain credit lines.
• Market paranoia and credit holding led to credit crunch

Who is responsible?
Federal: Unable to monitor and regulate the market
Lenders: Greed led to such loans
Wall street: For backing securities based on high risk subprime loans
Loaners: for taking loan that they can’t repay, but they can’t be blamed.