Wall Street dealers, some of which are rumored to be taking substantial losses from the ailing subprime mortgage market, are tightening the purse strings - in part to limit their exposure to mezzanine ABS CDOs. Rumors were running rampant last week of pulled or significantly tightened warehouse lines, liquidations and difficulty selling deals once they had priced.

"Across the Street, dealers have been taking more risk. It's been a larger book of business for them, but now they've got too much exposure long the risk," said one CDO asset manager. Dealers last week were looking to buy short positions on the ABX indices in order to hedge what in some cases was an overwhelmingly long bet, sources said. "That's what the meltdown is all about. Everybody is long, and the warehouses don't want to fund it," said another CDO manager.

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