It's not news that the real estate sector is hurting, none more so than subprime lenders. Lots are folding up, the most recent being EquiBanc Mortgage Corp., a unit of Wachovia, which has decided to shut down the unit. Wall Street firms have been in retrenchment mode. In some cases, they are closing off the liquidity spigots--consider Ownit Mortgage Solutions, which went bankrupt recently. JPMorgan Chase notified the company in November that, because it  was in default, it was shutting down its $500 million credit line. Ouch! We'll likely see a lot more of this going forward, unless the market stages a strong surge soon. Merrill Lynch, which owned 20 percent of the company, ultimately declined to bail it out--sealing its fate. Securitization can help reduce risk to a high degree, but it can't eliminate it.

For more:
- here's a New York Times article