The Incredible Shrinking Commerccial Paper Market

A few days ago I commented on the Seattle-King County snafus regarding "commercial paper" and the subsequent loss of millions of dollars.

Reuters has an alarming article on the shrinking commercial paper market - - - a 13% decline in the past month. So why should you, as a real estate and housing professional, be concerned? The credit squeeze (Federal Reserve reflects fourth straight weeks of heavy decline) impacts business expansion and short-term lending. If the perception that credit is no longer available prevails, panic sets in. The DOW is down over 230 points this morning!

This is not just a good ole USA problem. Subprime loans were bundled together with other loans and sold as securities around the world. Britain's third largest bank had to issue calming news blurbs last week as their exposure to USA subprime loans in their portfolio became public.

Let's hope that calm prevails, and more honest assessments & disclosure of risky mortgages are openly shared.

Michael Lozar
Bellingham Mortgage Advisor