Just hours after being printed, Merrill Lynch analysts Dan Castro and Glenn Costello issued a report refuting Thursday's Wall Street Journal story on the negative effects of banks' exposure to subprime mortgages titled "Subprime Could Be Bad News For Banks."

Castro wrote: "While we warned last year that subprime was sensitive to the weakening economy, it's important to look past the headlines here." Castro calls the WSJ view that the increase of seriously delinquent loans, to 6% from 4% in 2001, "simplistic."

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