3Q stocks report: Market back to freewheeling ways ($)
Chicago Tribune
by Bill Barnhart – Market Report - October 8, 2007

Janet Tavakoli, president of Chicago-based Tavakoli Structured Finance, a consultant to financial institutions, said slicing and dicing baskets of loans to meet various risk/reward demands of investors is not necessarily bad or contrary to the rules of diversification.

"If you understand, taking that risk is not a bad idea," she said.

"There is no point diversifying into an asset that is doomed," she said.

Tavakoli believes the economy and financial markets can absorb the failures of subprime-mortgage packagers.

"We're going to see volatility going forward as this stuff plays out, but we've seen things like this before," she said.

Meanwhile, greater discipline by lenders might reduce overall credit availability, but "getting back to sound lending practices is going to be very good for the economy and very good for the stock market," Tavakoli said.


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