News from the lending front. "Brascan Adjustable Rate Trust I today announced a change in the monthly distribution of the Fund. The reason for the change in the monthly distribution is the flattening of the U.S. yield curve which has narrowed the spread between BART's cost of funds and the return on the Fund's investment portfolio."

"The Federal Reserve Bank has increased short term interest rates by 100 basis points which caused funding costs to rise at a rate greater than the rise in yield on the Fund's investment portfolio. As a result, there is a reduction in BART's income available for distribution to Unitholders."

"The market is currently pricing in the expectation that the Federal Funds rate will increase to 4.75% in April, 2006 This has put further upward pressure on interest rates and the shape of the yield curve. Brascan is an investment trust with exposure to a portfolio primarily consisting of mortgage backed securities with an actual or implied AAA rating. Brascan Adjustable Rate Management Ltd., an indirect wholly-owned subsidiary of Brookfield Asset Management Inc."

And Paul Muolo from NMN. "What is it with Southern California and nonprime mortgage bankers anyway? Take a look at the top five subprime firms. All five are based in SoCal. And 10 of the top 15 are in California, with the northern part of the state claiming a few HQs as well."

"Now, for the bad news, it appears SoCal-based mortgage firms are shedding not only jobs but office space, big time. Grubb & Ellis executive Oliver Fleener has been witnessing lender after lender looking to unload their office space via a sublease arrangement. He said that mortgage firms suffering the most are young, net branch operations."

"He also had this to say about the companies: 'It seems all these executives know each other'...And in case you missed it; Washington Mutual slashed 2,500 mortgage jobs last week, mostly in operations."

"Washington News: Office of Thrift Supervision director John Reich, says adjustable-rate mortgage products with negative amortization features are 'not appropriate for unsophisticated borrowers or those with weaker credit capacities.' Mr. Reich told the Exchequer Club that the regulators are worried about the sudden growth in option ARM originations by institutions with limited experience in managing the risks of these loans."

About office space, "When billionaire commercial real estate developer Carl Berg of Silicon Valley speaks, his industry peers listen. But, while many today might still take a moment to hear his words, they're clearly not heeding his message."

"Amidst one of the most robust investment sales markets the valley has ever seen, Mr. Berg's company, Mission West Properties, has been sidelined. Others are simply willing to pay far more than he is for the office and R&D buildings that are his specialty."

"To justify their prices, Mr. Berg told Wall Street analysts recently, Silicon Valley buyers today will have to see 'substantial' increases in rents in the next several years. If they don't, 'you have a whole bunch of idiots who are really going to lose a lot of money.'"