“Subprime” Ready for Prime Time
The American Dialect Society has announced that the Word of the Year for 2007, as voted by members at its annual meeting, is subprime. It’s a sturdy choice, given how much media attention has circulated this past year about the financial crisis in the housing sector blamed on mortgage loans made to high-risk borrowers with credit ratings that are less than prime. Subprime (sometimes hyphenated as sub-prime) might not be as flashy as some previous selections by the ADS, such as truthiness in 2005 (comedian Stephen Colbert’s term for “truth from the gut” unencumbered by facts) or plutoed in 2006 (‘demoted or devalued in the manner of Pluto losing planet status’). Nonetheless, the word has an intriguing history, even for people like me who aren’t terribly fascinated by the lending practices of banks.
In its earliest attested usage, subprime simply meant “substandard” or “below top quality” in a very general sense. A 1960 article in Operational Research Quarterly referred to “sub-prime material” that can cause delays in automatic data-recording equipment. And in 1970, the Wall Street Journal reported that the Armco steel company was introducing a “subprime” line of cold-rolled sheet metal, “intended for users that don’t need surface qualities 100% free of defects, principally for use in unexposed parts, including the back of a refrigerator.” Over time, this sense of subprime was extended in all sorts of directions, such as this Toronto Star critique of a cinematic performance by Madonna in 1993: “her ‘work’ in Body Of Evidence is sub-prime.”
In the mid-1970s, subprime began to be used in the banking sector, but in a context that is just about the opposite of current usage. Rather than relating to the risky credit status of a borrower, subprime originally described a “below prime” lending rate — in other words, below the prime rate that banks and other lending institutions offer to qualified customers. So in this sense, a loan with a subprime rate is a good thing for the borrower, who is allowed to pay an interest rate lower than what is typically offered. That explains this quote from an August 1975 Associated Press article: “Isn’t the prime supposed to go only to the most credit-worthy customers? Why, therefore, they might ask, was subprime offered to a municipality whose credit standing is suspect?” Similarly, a March 1978 article in Institutional Investor told of banks “offering sub-prime rates to lure back customers.”
It wasn’t until the mid-’90s that the currently popular sense of subprime became widespread. Now it was the borrowers themselves who were being classified as “less than prime” based on their credit histories. Customers in this high-risk category were increasingly able to borrow money from established lenders, particularly to pay for mortgages, automobile loans, and the like. Whereas the older sense of subprime implied a loan with a low interest rate, the subprime loans of the ’90s and ’00s have rates much higher than standard. An April 1995 article in Retail Banker International described auto-lending companies offering “loans of new and late-model cars to consumers with imperfect (‘sub-prime’) credit histories.” And a February 1997 New York Times article heralded the coming crisis: “A Risky Business Gets Even Riskier: Big Losses and Bad Accounting Leave ‘Subprime’ Lenders Reeling.”
The two competing senses of subprime, referring either to favorable low-interest loans or to unfavorable high-interest ones, would seem to be in direct opposition. You might even call it a “Janus-faced word” or “contronym,” i.e., a word that serves as its own antonym, like cleave or sanction. But the surrounding context should be enough to establish whether it’s the lending rate or the borrower that is considered subprime. Consider another sub- word, subpar. For a golfer, a subpar score is a good thing, but in its more general sense subpar typically characterizes an inferior performance. Only context can resolve the conflict.
As the word subprime becomes more widely known, we can expect many new extensions of meaning. A recent MSNBC report on business buzzwords claims that the word is already in use as a verb “loosely defined as the ability to completely dig one’s self into a hole and then expect a bailout,” as in “I completely subprimed my Algebra test yesterday.” As far as I can tell, that kind of usage is a figment of the reporter’s fertile imagination, since even Urbandictionary, that student favorite, is thus far unaware of subprime as a generic verb. (When the word does show up as a verb, it tends to be in punning formations like “subpriming the pump” or as an ad-hoc reflexive: a columnist for the Aspen Times wrote that “homeowners have subprimed themselves into an economic disaster.”) But let’s hope that the subprime crisis subsides before it spawns too many new additions to our vocabulary. Even if it’s enriching to the lexicon, it’s hardly enriching to the economy.
Ben Zimmer is an editor at Oxford University Press and a true word junkie. Once a week he surfaces from his dictionaries to write this column. Check out his “words of the week” on our main page (center column) or by clicking here