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As the country tries to escape its economic doldrums, thereâs been a lot of talk about how banks made âtoxic loansâ that exposed them and others to huge losses. Itâs a very descriptive phrase that allows the biologic and economic worlds to collide.
The phrase âtoxic loanâ may have first appeared in 1992, as a headline on a series of articles by the American Banker. How prescient!
Except that these were loans by banks to clean up environmentally damaged areasâplaces poisoned by toxics.
âToxic loanâ next appears in 2000, according to Nexis, in a Cleveland Plain Dealer article about predatory lending, defined as âa growing practice among some mortgage and home-equity loan companies of seeking low-income borrowers and charging them unfairly high fees and interest.â That gets a little closer to the way the phrase is used today. But the practice then was âtoxicâ only to the borrowers, who couldnât maintain the payments, and not to the lenders, who simply resold the foreclosed homes in a booming real estate market and recouped all their money.
But, by its nature, a toxin spreads its poison, and now both the borrowers and the banks are dropping like flies.
In a similar way, the use of the word âtoxinâ itself has worked its poison into the lexicon. âToxic,â meaning poisonous, has existed for several hundred years and is almost always used as an adjective. Most people will use âtoxinâ as the noun. But most people will be wrong, unless they are speaking specifically of an animal or plant poison.
âToxinâ was first used in the late 1800s, when medical studies of bacteria were gaining currency. Every major dictionary defines a âtoxinâ as a poisonous microorganism produced by a living thing. By those dictionariesâ lights, chemical poisons like PCBs or melamine are âtoxics,â but not âtoxins.â
It sounds funny, though correct, to use âtoxicâ as a noun, as it was in the second paragraph and above. All âtoxinsâ are âtoxic,â but not all âtoxicsâ are âtoxins,â at least according to dictionaries not yet poisoned by common usage.
So while itâs OK to say that the bad loans were âtoxicâ to banks, itâs really not OK to say that the loans were âtoxinsâ poisoning the banking system, as the fourth paragraph does. Well, since people were making the loans, one might argue that the loans were spread by a human poison … but donât tell that to your banker.
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