Wall Street Wrestles

Wall Street is wrestling with the subprime mortgage problem.Subprimes,issued to borrowers with flawed credit,have been defaulting at a high rate.Bonds which are backed by subprimes have consequently been put at risk.Bear Stearns(BSC),a leading investment firm,has had to scramble to save two hedge funds that contain these bonds,which are called collateralized debt obligations(CDOs).Many prominent firms,such as J P Morgan Chase(JPM),Merrill Lynch(MER)and Deutsche Bank(DB),held over 20 billion dollars in such securities.The fear that the subprime failure will spread to corporate credit is adding to market nerves.It is a climate of complexity,uncertainty and leverage,according to Jay Mueller of Wells Fargo.In such times,investors might consider quality income funds such as Blackrock's BNA or Lehman Brothers' AGG.