In many ways, the subprime industry was the creation of the big Wall Street firms, who provided the warehouse credit lines to the actual mortgage companies, bought their product, packaged them all into securitized products and then sold them off. At some point, the likes of Merrill Lynch and Morgan Stanley actually bought subprime companies.

But well before that, Wall Street firms were the key credit enablers. That role was highlighted in the recent settlement between Goldman Sachs and Mass. Goldman Sachs has agreed to pay a $10 million fee and let more than 700 Massachusetts residents rework mortgages in a settlement reached as part of a state investigation into subprime mortgages, reports the AP, which also reports Goldman Sachs was a large lender to the likes of New Century Financial Corp. and Option One Mortgage. It remains to be seen if other big firms will also be targeted. 

For more:
- here's the AP article

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