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 March 19, 2007

Are Subprime Lenders Getting What They Deserve?
Several subprime lenders are currently facing bankruptcy. The U.S. Treasury Department's undersecretary for domestic finance, Robert Steele, reports that in spite of these failures, the current situation in the subprime lending market is manageable.
Steele states that the markets are monitored on an ongoing basis and that the department does their best to monitor market conditions.

A House Financial Services panel heard testimony by several parties that echoed Steel's comments.

The chairman of the (MBA) Mortgage Bankers Association states that there is no question that there have been subprime lenders that have gotten very aggressive with the offering of this product. Subprime lenders are now finding themselves being punished by a market that has investors abandoning them.

An additional witness, Karen Shaw Petrou is a managing partner with Federal Financial Analytics. She stated in her testimony that subprime mortgages make up an estimated $1 trillion out of the $8 trillion United States home mortgage market.

She pointed out that the current situation is distressing in that people have overlooked that subprime really means higher risk, and higher risk equates to greater potential losses.

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