Feds probing nine banks over MBS sales

by MPA25 Oct 2013

The Justice Department is investigating at least nine banks for their sale of mortgage-backed securities, according to a Reuters report. The probes are being conducted by the same task force that reached a $13bn settlement with JPMorgan Chase last week.

Banks being investigated include Bank of America, Citigroup Inc., Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley, Royal Bank of Scotland, UBS and Wells Fargo. Most of the probes involve possible civil violations related to misleading investors on the quality of residential mortgage-backed securities, according to a CNBC report.

The investigating task force was formed by the Obama Administration in January of last year, according to CNBC. Government requests for documents and discussions with the banks have stepped up in the last few months following Attorney General Eric Holder publicly hinted that more lawsuits over mortgage-backed securities were on the way before year’s end.

Several of the banks being probed are already under investigation, CNBC reported. Bank of America is being scrutinized by U.S. attorneys’ offices in California, Atlanta and New Jersey – as well as the DOJ – for mortgage-backed securities. Morgan Stanley is under civil investigation in California. Royal Bank of Scotland is being probed by the U.S. attorney’s office in Massachusetts, and Credit Suisse is dealing with investigations in Colorado and New Jersey.

Meanwhile, Citigroup is being investigated by prosecutors in Brooklyn and Colorado, and UBS, Wells Fargo and Deutsche Bank are all under investigation by various U.S. attorneys’ offices, according to a Reuters report.


Should CFPB have more supervision over credit agencies?