The merger of Aames Financial Corp. and Accredited Home Lenders - a move that is expected to create the sixth-largest subprime retail lender - is being called the first in an anticipated string of consolidations within the U.S. subprime mortgage lending industry, where participants continue to battle the higher cost of doing business. San Diego-based Accredited late last month announced plans to acquire Aames, a Los Angeles-based real estate investment trust for $340 million in cash and stock.

"We see this as a strategic consolidation in the sector ... and we would not be surprised if there are others to follow," said Jay Meyerson, chief executive of Aames, speaking during a conference call on the matter.

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