New York subpoenas Wall Street on mortgages
NEW YORK (Reuters) - New York state prosecutors have sent subpoenas to Wall Street firms seeking information related to the packaging and selling of debt tied to high-risk mortgages, a person familiar with the matter said on Wednesday.
The subpoenas, sent by the office of New York Attorney General Andrew Cuomo, requested information from a number of Wall Street firms.
The Wall Street Journal on Wednesday reported that Merrill Lynch & Co <MER.N>, Bear Stearns Cos <BSC.N> and Deutsche Bank AG <DBKGn.DE> received subpoenas, citing unnamed sources.
Deutsche Bank and Merrill Lynch declined to comment, while a Bear Stearns spokesman did not return calls.
Cuomo last month said he would subpoena investment banks as part of an expanding probe into the $10 trillion U.S. mortgage industry.
Reached on the sidelines of a public appearance in Albany, New York, earlier on Wednesday, Cuomo declined to comment.
"We previously announced an ongoing investigation in the mortgage fraud arena and that is an ongoing investigation," he told Reuters.
The Wall Street probe examines how investment banks reviewed the quality of mortgages before packaging them into products that were sold to investors.
The subpoenas also request information about how debt was pooled into securities and the banks' relationship with credit-rating firms.
Last month, Cuomo sued First American Corp <FAF.N> and one of its property appraisal units for colluding with Washington Mutual <WM.N>, one of the largest U.S. home lenders, to inflate property appraisals.
A week later, he announced the office had sent subpoenas to Fannie Mae <FNM.N> and Freddie Mac <FRE.N>, giant mortgage agencies sponsored by the U.S. government.
The subpoenas sought information on loans these enterprises purchased from banks, including WaMu.
Sending queries to the three investment banks marks the latest development in a 10-month probe into the mortgage industry by Cuomo, who was Housing and Urban Development Secretary under President Bill Clinton.
Cuomo's office has sent hundreds of subpoenas and has uncovered "fundamental flaws" in two areas, appraisals and securitization of mortgage loans, officials have said.
(Reporting by Joe Giannone and Dan Wilchins with additional reporting from Elizabeth Flood Morrow, Bill Berkrot, Tim McLaughlin and Justin Grant; Editing by Brian Moss)