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Part 4 of 5: Upheaval in the subprime market

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(This is Part 4 of a five-part series. See Part 1, Part 2, Part 3 and Part 5.) The federal government is presently under enormous pressure to "do something" about the subprime crisis. The various proposals that have emerged appear to reflect concern for abused borrowers in or heading toward foreclosure, a desire to punish those responsible for their plight, and the usual urge to score political points. This is not a brew likely to generate thoughtful reforms that look to long-term consequences. Doing nothing is also an option, and in my opinion, a better one than most of the proposals that have emerged. Here are some principles that reform advocates ought to observe. The Subprime Market is Open, So Let's Not Do Anything to Shut it Down: As I noted last week, the subprime market has undergone a significant blood-letting, yet for all that it has stayed open for business. Borrowers with poor credit who can't document their income can't get 100 percent loans anymore, but that's a go...