Moreover, the layers of intermediation between borrower and lender that increasingly characterize the financial system may have created new channels for the transmission of shocks within the financial markets and into the economy. We have seen some indications of this in the recent experience in the subprime mortgage market.
Packagers of securities whose performance is tied to subprime mortgages have suffered unanticipated losses, and as some originators have gone out of business and secondary markets have been disrupted, institutions along the chain have found themselves with unexpected exposures from warehousing or financing the holding of loans before securitization.