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To: willcousa who wrote (129859)	3/13/2001 5:26:18 PM
From: William Hunt	Respond to of 186894

willcousa ---I agree that they are set too high . Take a look at mortage rates ---currently they are peg to the ten year bond rate which means that they should currently be peg at 1% above the ten year bond or 6% --actual is closer to the 7% level . The banks set this rate to cover their butt in case they make a mistake ---it is a pretty good premium considering they still get points also BEST WISHES BILL

To: willcousa who wrote (129859)	3/13/2001 5:31:28 PM
From: GVTucker	Read Replies (1) \| Respond to of 186894

willcousa, RE: Milton Friedman would let the market set rates. I would love to see that tried. We are not as far away from that as you think. Most small business loans are based upon the lesser of a spread against prime (Fed driven) or a spread against LIBOR (market driven). Larger businesses have been able to borrow based upon market rates for some time now. Market based rates are even creeping into the mortgage world. Banks don't borrow at the discount window at all any more. The only place that I can think of that is still solely driven by Fed-set rates is probably the capital markets. Individuals still borrow and lend to buy stocks based upon a spread against Fed funds.