You are misunderstanding my question/statement. There shouldn't be a "subprime industry" per se as a distinct industry between "prime" and "creditcard debt." It should be a continuous spectrum of markets based on realistic evaluation of collaterals and creditworthiness; what is "realistic"? whatever the market says it is. If a company sets itself up as a pure packaging company that shoves money into subsidizing the purchase of over-priced houses, then be preprared to die the moment the market judge the real estate value differently.
Like I said, subprime is only a symptom of a much bigger credit bubble. If a car dealer, or any other business, can not survive except on a constant diet of cheap money, so cheap that savers are guarenteed to lose money to inflation thanks to the FED artificial depression of interest rate, then the business deserves to die and make room for more efficient businesses that can actually turn a profit on the business transactions instead of the time value of cheap money.
As for your power company analogy, the scrap value of a house is much much less than 22%. The scap value of a house is often negative, just look at all those sub-$1000 houses for sale in Detroit. The cost of transaction and demolition is more than the house itself.
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