Are charter schools the new mortgage crisis - Business Insider

The charter-school industry — consisting of schools that are funded partly by tax dollars but run independently — may be heading toward a bubble similar to that of the subprime-mortgage crisis, according to a study published by four education researchers.The study, "Are charter schools the new subprime loans?" warns of several factors that appear to be edging the charter industry toward a bubble premeditated by the same factors that encouraged banks to start offering risky mortgage loans.With the mortgage crisis, loan origination changed from an originate-to-hold model to an originate-to-distribute model. The OTD model allowed banks to sell mortgages into the secondary market, where they were bundled up and sold by the government-sponsored enterprises.In both the mortgage crisis and the charter industry, these business-model changes essentially transfer the risk to a third party.