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Investors may not be bailout losers

September 14, 2008

Regarding "Takeover will have winners, losers," Sept. 8:

This is a rather cynical and pessimistic point of view, at least insofar as Fannie Mae and Freddie Mac investors are concerned. Would these investors have been better off had Fannie and Freddie been allowed to fail?

The takeover should help stabilize the mortgage lending market, making it easier for new loans to be made. The new loans should be stronger and should relatively rapidly strengthen Fannie and Freddie's balance sheets and loan portfolios.

If the takeover is coupled with a more liberalized approach to loan workout for borrowers in trouble, investors could see a quick turnaround.

Michael Solomon

Canoga Park

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