To Our Clients

Dear Clients,

In view of the tumultuous developments in the U.S. and foreign financial markets, we felt it appropriate to give you our overview of the current situation and an explanation of what we think will be the ultimate outcome.

While the Federal Reserve has taken significant steps to provide liquidity to the financial institutions (commercial banks, investment banks, insurance companies, etc.) which hold mortgage-backed assets of questionable value, there is a high degree of unwillingness for investors to make capital commitments to these institutions. This has resulted in a crisis of confidence which, in turn, has wreaked havoc on the prices of the equities of those financial institutions.

Before the financial markets begin to recover, the weaker participants--who had contributed to the excess lending capacity in the mortgage market--will be either absorbed or eliminated. This process will require sacrifice, ingenuity, patience and perseverance. Then, at some point in the not-too-distant future, expectations of a return to financial stability will take hold and markets should recover.

At the foundation of our belief in the ultimate resolution of the financial market problems are the facts that central banks are taking the correct steps and that the economies of the world will continue to grow, albeit at a slower rate than had been experienced in recent years. The recent decline in energy and related commodity prices, as well as the stabilization of the Dollar, coupled with reduced inflationary expectations, afford the opportunity to correct the malaise.

Finally, we want to assure you that we continue to monitor the developments impacting the markets, as well as the securities in your portfolio(s) and will be certain to make any adjustments deemed necessary as conditions continue to evolve. Please feel free to contact us with any questions.

Very truly yours,

Gofen and Glossberg, LLC