It’s also worth remembering that most of these Wall Street firms had their own in-house subprime operations. They owned them, controlled them, and profited from them. Perhaps that’s one way around the legalistic ass-covering in the securities offerings documents. Dean summed a lot of this stuff up in his “Boiler Room” cover story in 2008:

Indeed, it is surprising today to remember that most of the big Wall Street firms, to skip the middleman and so desperate for new loans to turn over, bought and expanded their own retail subprime lending operations as the boom heated: Lehman had bnc Mortgage LLC; Merrill Lynch had First Franklin; Deutsche Bank bought Chapel Funding; and so on. Bear Stearns bought Encore Credit Corp. as late as February 2007, unwinding it a few months later.

How much of this went on at the Wall Street-owned shops?

There are lots of bodies still buried here, you can bet on that.


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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.