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August 24, 2007


John Rowe

This is a cogent piece of work, worthy of an editorial in the WSJ. My comments:
Fanny and Freddy, with their 417k limits, or whatever, are becoming irrelevant in high income areas like mine in Bay Area Northern California. Immediately, the limits on mortgages these organizations purchase for repackaging should be raised to realistic levels that reflect economic conditions in urban areas.
There have been several pieces in the financial papers putting numbers on the fraction of the mortgage debt at risk in the subprime area. It is not large. Dick may wish to weigh in on this topic in a future editorial. Some groups can and should take a haircut for nonsense lending, but the rise in subprime defaults in and of itself will not dunk the economy. The stock market multiples on the Dow and S&P are healty and business is good. The Dow may dive but subprimes will not be the driver.

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