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(The studies cover only loans packaged into securities, not those held on the books of banks).
Investors were assured, the lawsuit said, that the firm scoured the loans packaged into the investments to assure their quality.
An "unprecedented" number of the loans packaged and sold to investors came from mortgage brokers, it said.
According to the complaint, the bank dismissed flaws in the loans packaged into securities even while assuring investors that the quality was sound.
For many, the crisis is the result of a shift from traditional "relationship banking", where borrowers are well known to lenders, to a new system of arms-length finance, where investors buy bundles of anonymous loans packaged in a security.
The share of new mortgages sold to investors excluding loans packaged by government-sponsored mortgage companies, such as Fannie Mae and Freddie Mac rose from less than a third to more than a half between 2001 and 2005.
Similar(39)
Government-sponsored companies like Fannie Mae and Freddie Mac, and the big investment banks, especially Bear Stearns and Lehman Brothers, buy loans, package and resell them.
Wall Street was there to pick up their subprime loans, package them with other loans (some quality, some not), and sell them to investors.
Marginal home loans were packaged into supposedly safe securities.
Instead, in one form or another, the loans are packaged and sold as securities.
After the loans are packaged together, banks slice off pieces for sale to investors.
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