Justice Department Probing Big Wall Street Firms On Mortgages


Turning its attention to bigger fish in the subprime mortgage scandal, the Justice Department is investigating whether lenders or Wall Street firms defrauded investors in the sale of risky mortgage securities, reports McClatchy Newspapers. “We absolutely are looking at the conduct of the securitizers themselves, and what did they say to those who purchased the (securities),” Assistant Attorney General Lanny Breuer told a commission created by Congress to investigate causes of the nation’s economic collapse.

Breuer didn’t identify any company under scrutiny. Wall Street’s biggest investment banks bought many of the $2 trillion in home mortgages issued to shaky borrowers, converted them to high-yield bonds, and sold the bonds to investors including pension funds, insurers, and foreign banks. Many of the securities have since defaulted, and investors have lost billions of dollars.

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