Recall, too, that liability for their securitized products was behind the freakout over Georgia’s anti-predatory-lending laws, which the Bush administration nullified in 2003 at the behest of the banks. Here’s Audit Inspector General Dean Starkman on that:

In 2002, Georgia passed an anti-predatory lending law that had all the usual provisions—it forbade deceptive practices in the disclosure of basic terms, curbed pre-payment penalties that kept borrowers from refinancing or selling their homes, banned usurious interest, etc.—but it also had a twist: it extended liability for violation of the new law to any player in the lending chain, including Wall Street houses that bundled the loans into securities and pension funds that bought them, and left potential damages open-ended.

One can only wonder what might have happened if those reselling mortgages had known they would be liable for how the mortgages were created.

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.

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