Spitzer Returns! New York A.G. Probes Wall Street On Mortgage-Backed Securities
The punches keep on coming for some of Wall Street’s biggest firms. A handful of firms were sent subpoenas late this summer courtesy of New York State Attorney General Andrew Cuomo. The attorney general is seeking details about the packaging and selling of debt tied to high-risk mortgages, according to the Wall Street Journal. (Subscription required.)
Merrill Lynch, Bear Stearns and Deutsche Bank AG are some of the firms being asked how the mortgages were being packaged and then offered to investors. The investigation also focuses on how the debt was pooled into securities, including banks’ arrangements with credit-rating firms, according to the report. Were appraisals inflated (and offering documents inaccurate) to generate fees?
Last month, Cuomo said he was conducting an investigation of subprime-lending practices, and subpoenaed Freddie Mac and Fannie Mae.
