Who's exposed? Barron's ventures a guess by way of its "The Trader" column:
"WHILE BROKERS HAVE RESIDUAL EXPOSURE, the largest firms are in the business of moving and shipping -- but not storing -- such loans, notes BofA's brokerage analyst Michael Hecht. Street firms can be stung if the value of loans bought drops sharply before they can sell derivatives and pass along risk. But in a worst-case scenario, Hecht estimates the earnings hit at 5% for Bear Stearns (BSC), 4% for Lehman Brothers (LEH), and 2% each for Goldman Sachs (GS), Morgan Stanley (MS) and Merrill Lynch (MER). Subprime residual interest as a percentage of tangible equity is roughly 9% for Bear and Lehman, and 3% for the other three. "
The column goes on...
"Mortgage lenders may be on shakier ground. The risks are worse for those dependent on payment stretching, which exacerbates credit risk and puts pressure on new originations, and indirectly sourced loans inked at weaker prices and with less credit control, says BofA's Robert Lacoursiere. Lenders susceptible to credit deterioration include Indymac Bancorp (NDE), Fremont General (FMT), Novastar and Accredited Home Lenders (LEND), while New Century, Downey Financial (DSL) and GMAC are on the watch list."
I'm sorry to be a bit skeptical, but the columnist cites the work of Wall Street analysts. How many analysts have had their guns ablazin' warning early about a subprime debacle in the first place?