Transcript

ROBERT RUBIN:  Credit market disruption as you know began with subprime mortgages and then spread to leverage finance and then to most other credit markets but although now, it’s spread out to affect credit markets more generally. I think in many ways mortgages remain at the heart of today’s credit market duress contributing pressure on housing prices, balance sheets, the lending appetite of creditor institutions, foreclosure rates, confidence more generally and other credit markets. In that context the policy makers are grappling with the question of whether substantial additional measures should be adopted with respect to the mortgage markets beyond those already in place and if so, should public monies be used.

As many of you know I work at a major financial institution, but the views that I’m expressing are mine. Not the institution’s. And they relate solely to the question of economic risk and risk to homeowners.

With respect to economic risk, I’ve been around financial markets for a long, long time but I believe we are in somewhat uncharted waters and that the outlook for both the credit markets and the economy is relatively uncertain. It is certainly possible that the markets will work their way through all of this without inflicting significant additional damage on the economy. But having said that, I think the risk is serious enough to call for substantial additional action in the mortgage area assuming that measures can be adopted that when the pros and cons are weighed out, are on balance, sensible.

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