Dean Starkman has been applauding McClatchy’s series on Goldman Sachs (an Audit funder) for a couple of days now. Add another Audit appreciation today.

McClatchy has been doing what Dean has been calling for for a long time now: Looking much more closely at how Wall Street fueled the mortgage crisis and how it was deeply connected to the shadier parts of the housing industry. Or as McClatchy’s Greg Gordon puts it:

… one of Wall Street’s proudest and most prestigious firms helped create a market for junk mortgages, contributing to the economic morass that’s cost millions of Americans their jobs and their homes.

Today, McClatchy examines Goldman’s relationship with New Century Financial, a firm that was something of the canary in the coalmine of this financial crisis—it was the second-biggest subprime mortgage lender when it went belly-up in April 2007, which was very, very early. In other words, it was one of the worst actors in the whole mess:

Perhaps no mortgage lender was more emblematic of the go-go atmosphere in the sprouting industry that was seizing an outsize share of the home loan market.

Traversing the country in private jets and zipping around Southern California in Mercedes Benzes, Porsches and even a Lamborghini, New Century executives reveled as the firm’s annual residential mortgage sales rocketed from $357 million in 1996 to nearly $60 billion a decade later…

What does that have to do with Goldman Sachs and Wall Street?

For $100 million in mortgages, New Century could command fees from Wall Street of $4 million to $11 million, ex-employees told McClatchy. The goal was to close loans fast, bundle them into pools and sell them to generate money for the next round.

Inside the mortgage company, the former employees said, pressure was intense to increase the firm’s share of an exploding market for mortgages that depended almost entirely on Wall Street’s seemingly unlimited hunger for bigger, faster returns.

Aha! But wait—why did Wall Street want to buy this trash?

Goldman and other investment banks could put $20 million in the till by taking a 1 percent fee for assembling, securitizing and selling a $2 billion pool of mostly triple-A rated bonds backed by subprime loans — and that was just stage one.

That takes you to “The Giant Pool of Money.” And that was far from the only juice being squeezed from these lemons. Goldman et al got servicing fees and the like, plus they “extended lines of credit to New Century — known as “warehouse loans” — totaling billions of dollars to finance the issuance of more home loans to other marginal borrowers. Goldman Sachs’ mortgage subsidiary gave the firm a $450 million credit line.”

In other words, Wall Street lent the money to the predatory firms to create the shady loans so it could buy them from them, slice them into securities and sell them to the greater fools. This was so profitable there weren’t enough decent loans to be made. So to feed the beast, mortgage lenders came up with disastrous inventions like NINJA loans (No Income, No Jobs, No Assets) and Wall Street, ahem, looked the other way.

It was a vicious circle of profit (virtuous—if you were one of those who lined their pockets through it) and was interrupted only when the underlying loans got so bad that borrowers like the ones with no income, no jobs, and no assets in many instances couldn’t even make a single payment on the loan. Panic!

McClatchy does well to report on the New Century culture, helpful in illustrating the lie-down-with-dogs-get-up-with-fleas thing, writing about the sexualization of some of the work, something reminds us of BusinessWeek’s fascinating story on the subprime industry’s descent into decadence (the sub headline on that one should be all that’s needed to entice you to read that one: “The sexual favors, whistleblower intimidation, and routine fraud behind the fiasco that has triggered the global financial crisis.”)

But it wasn’t just sex. New Century was giving kickbacks to mortgage brokers to get their loans, McClatchy quotes a former top underwriter there as saying.

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