Tonight WaMu posted quite bad earnings and missed estimates. About subprimes:

Credit quality at the Seattle lender was a damper to earnings. WaMu said the subprime mortgage industry “significantly weakened” during the fourth quarter and negatively impacted the company’s pretax earnings by approximately $160 million.

More here:

Fourth-quarter results from several banks suggest the benign credit environment of recent years has begun to deteriorate and could restrain future earnings, analysts said on Wednesday.

“Credit has been tailwind for this industry for several years, but it’s becoming a slight headwind now,” James Ackor, an analyst who covers IndyMac and other lenders at RBC Capital Markets, said.

“Credit has been so good for so long — particularly in the mortgage market, which has been supported by an incredibly robust housing market,” Ackor added. “Credit being cyclical and with a deterioration in pockets of the housing market, it stands to reason that the environment will deteriorate.”