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Some say the timing displayed a lack of risk analysis, while others said an urge to jump on the subprime gravy train meant Merrill Lynch was out of touch with reality. No matter how you look at it, today was the end for Merrill Lynch’s subprime lending. They are reportedly shuttering its troubled subprime mortgage lender, First Franklin, according to CNBC. To add some sting to their mortgage blues, Merrill paid $1.3 billion to acquire First Franklin from National City in late 2006, just months before the subprime mortgage market imploded.

The closing will impact about 400 people, and we are reminded that the proper term for subprime is “residential mortgage business.” We never subscribed to the theory that poor people and subprime loans caused the problem. Lax lending standards and poor risk analysis, combined with government regulations that tried to ensure fairness for all, would have caused a disaster if a used car lot tried to emulate what we saw in the “residential mortgage business.”

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