The end for New Century is drawing closer. The sub-prime mortgage lender has stopped making loans. The halt on loans is, at best, a temporary measure. Without new business, the company will be unable to pay wages and other costs. The company’s stock has plunged by almost 90 percent this year, and bankruptcy protection seems to be a matter of days away.

Should the company go bust, it will bring the subprime crisis to an entirely new level. The company is, or should we say, was America’s second largest subprime lender. In 2006, total mortgage production at New Century was $59.8 billion,. It employed more than 7,200 people at the end of 2005.

Bankruptcy is likely to be followed by a criminal investigation. The company disclosed last week that U.S. prosecutors are probing trades in securities that occurred before the company announced Feb. 7 it needed to restate earnings. Investigators also are scrutinizing the company's accounting. New Century said it underestimated costs to buy back loans sold to investors that later went sour.

What has brought New Century to the edge of extinction? The company sold exotic mortgages to people who didn’t understand them and who quickly ran into payments difficulties. Once the default rate started to rise, New Century’s financiers took fright and cut off funding for new business. In a statement, company said it is in talks with lenders and potential partners about refinancing or “other alternatives.” New Century added it can give “no assurances” that efforts to refinance the debts will succeed.

More subprime bankruptcies will follow. The question is how long will it be before the default plague the the subprime panic infects the mainstream banking system.