Wall Street's subprime woes continue

Wall Street's premier banks are turning off the spigots at subprime lender New Century. The firm said in a filing that some banks, through short-term repurchase agreements and aggregation credit facilities, were stopping the flow of credit that is the lifeblood of such companies. The company has received notice from Morgan Stanley noting certain defaults and discontinuing financing. Similar letters have been received by Citigroup, Credit Suisse, Bank of America, Barclays and Goldman Sachs. As the bubble bursts, you have to wonder about the exposure of top banks to the subprime mess. HSBC's announcement that it will take a $10.6 billion write-down for problems in its U.S. mortgage business may be a harbinger. More than 20 subprime lenders have closed. Some top banks, like Morgan Stanley and Merrill Lynch, have recently bought into the business. Most top investment banks are distributors or transfer agents for the loans, which stayed on a bank's books before securitization. There may be some commercial banks in worse shape. With earnings season upon us, we'll have some answers soon.

For more:
- here's a CNNMoney.com article