Letters to the Editor
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Subprime lenders will go bankrupt
They have buyback clauses in the debt--if a certain amount of loans go bad within the first 6 months, say, they are obligated to buy back the loan/security. That is what is driving them to the wall. So many loans are going bad that they don't have the money to buy them back.
The other issue with originators of securities is that they often slice them up into tranches with different ratings. The ones that they can't unload, if they can't unload some of the tranches, tend to be the lower rated ones. So they can be caught out by that. I-banks won't go bankrupt over this, but it may sting a little.