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July 25, 2008 11:48:51 AM CDT

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NY Subpoenas Wall Street Heavies in Subprime Probe

Posted Dec 5, 07 10:42 AM CST in Business 

(Newser) – Several high-profile Wall Street firms that packaged and sold subprime mortgages have been subpoenaed by New York prosecutors, the Wall Street Journal reports today. Merrill Lynch, Bear Stearns, and Deutsche Bank—among others—will be asked to explain how the offerings were reviewed before they were sold to investors, and what relationship the firms had with credit-rating services.

Last month, state prosecutors, apparently probing mortgage appraisals, subpoenaed giants Fannie Mae and Freddie Mac. The subprime debacle has spawned multiple state and federal investigations, with authorities appearing to focus on how risky subprime mortgages moved from lending institutions to Wall Street without being red-flagged. The collapse has cost markets billions, and led to hundreds of thousands of foreclosures.

Source Wall Street Journal

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A sign of Deutsche Bank headquarters in Milan, Italy, Friday, Jan. 23, 2004. A Milan judge Wednesday June 13 2007 indicted four International banks on charges related to the 2003 failure of the Parmalat...   (Associated Press)
The logo for Bear Stearns is shown at its corporate headquarters in New York, in this July 18, 2007 file photo. Bear Stearns Cos., the nation's fifth-largest investment bank, on Wednesday, Nov. 28, 2007...   (Associated Press)
People enter and exit the Bear Stearns corporate headquarters in New York in this July 18, 2007 file photo.   (Associated Press)
A man checks his PDA outside the headquarters of Merrill Lynch & Co., Wednesday, Nov. 14, 2007, in New York.   (Associated Press)
The twin towers of the Deutsche Bank in Frankurt, central Germany, are seen in a Nov. 16, 2006 filer.   (Associated Press)
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subprime mortgages  • Bear Stearns  • Merrill Lynch  • Fannie Mae  • Deutsche Bank


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