This is the Cato Daily Podcast for Wednesday, August 12, 2015.

I'm Kila Brown.

Subprime Lending was a key contributor to the financial crisis,

but it's nonetheless making a comeback

but there are ways to stop the feds from subsidizing risky mortgage lending.

Mark Calabria, director of financial regulation studies at the Cato Cato Institute offers his thoughts.

So subprime borrowers are people who are just less likely to pay back their loan.

Yeah, subprime borrowers are borrowers with weak credit scores that

reflects a much higher probability of default and let me be very clear

these credit scores are very good predictors.

This of course doesn't credit scores are very good predictors.

This of course doesn't account for why you might be subprime.

It isn't a value judgment.

It's not sort of you're a bad person.

A lot of people might be subprime because they've had

unexpected medical bills, they've hit a tough patch in the road, it's important to

keep in mind that these credit scores are agnostic to all of that.

But some subprime borrowing contributed mightily to the financial crisis in 2008.

It did.

We clearly had elevated level of defaults in the mortgage market.

In my opinion, that was a combination of subprime borrowers

with very low equity.

...