2007 WOTY is "subprime"

[Baker, John]

My compliments to the voters; this is the best WOTY choice in years.
 
"Subprime" originally referred to bank loans that were given to their best corporate customers and priced below prime rate.  In the early 1990s, lenders began using the term instead to refer to loans to consumers with less than ideal credit.  Originally these were auto loans.  The earliest use I see is from the Star Tribune, a Minneapolis newspaper, on 7/17/1993 (Westlaw):
 
<<Olympic Financial is joining with American Credit Corp., a commercial finance unit of Cargill Inc., to originate higher-yielding, lower-credit quality auto loans.

The new business would handle borrowers with spotty employment or credit histories who typically pay up to double the prevailing interest rate to finance their auto through a finance company. But the alternative often is a turndown, and successful payment of the loan can qualify them for a better rate later.
 
. . . .
 
"We wanted to provide our dealer network with alternatives for the purchase of those loans currently declined by Olympic," said Chief Executive Jeff Mack. "We think it's going to become a large part of our business. There's a need in our markets to provide a `prime' and `sub <https://webmail.stradley.com/Exchange/JMB/Drafts/RE:%20%20%20%20%20%202007%20WOTY%20is%20%22subprime%22.EML/1_text.htm#I> -prime <https://webmail.stradley.com/Exchange/JMB/Drafts/RE:%20%20%20%20%20%202007%20WOTY%20is%20%22subprime%22.EML/1_text.htm#I> ' sources of financing.">>
 
By 1995 the subprime lending business had expanded from subprime auto lending to subprime mortgages.  The earliest reference I see is from US Banker, an industry magazine, on 6/1/1995; I quote from the abstract, which is all that is available on Westlaw:
 
<<Banks that used to avoid subprime <https://webmail.stradley.com/Exchange/JMB/Drafts/RE:%20%20%20%20%20%202007%20WOTY%20is%20%22subprime%22.EML/1_text.htm#I>  mortgage <https://webmail.stradley.com/Exchange/JMB/Drafts/RE:%20%20%20%20%20%202007%20WOTY%20is%20%22subprime%22.EML/1_text.htm#I>  borrowers can now work with a growing number of mortgage brokers willing to take on risky loans. These brokers handle so-called B and C credits--those with tainted credit or job histories, weak collateral, or a combination thereof. These credits have become more and more popular with banks because high interest rates and low home sales have made risky lending more attractive. All lenders have to do is originate the loans and hand them off. In return, they receive a relationship with the borrower, fee income from the seller/servicer, and possibly even some recognition from regulators for community reinvestment. >>
 
 
John Baker
 

________________________________

From: American Dialect Society on behalf of Grant Barrett
Sent: Fri 1/4/2008 8:37 PM
To: ADS-L at LISTSERV.UGA.EDU
Subject: 2007 WOTY is "subprime"



The word of the year is "subprime." Press release here:

http://www.americandialect.org/

Grant Barrett
Vice President of Communications and Technology
American Dialect Society
http://www.americandialect.org <http://www.americandialect.org/> 
gbarrett at worldnewyork.org

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