By Kevin Drawbaugh
WASHINGTON (Reuters) - The senior Republican on the Senate Finance Committee called on Tuesday for more public disclosure and transparency in the mortgage market.
As Congress seeks to respond to the crisis in housing finance, Sen. Charles Grassley said more transparency, such as the disclosures mandated by the Securities and Exchange Commission, is needed in the troubled market for mortgage- backed securities.
"Included in transparency is some sort of reporting so that somebody in government knows what's going on. It's kind of along the lines of what the SEC's supposed to be doing," Grassley said at the Reuters Regulation Summit in Washington.
The Iowa lawmaker urged tough action in any cases of legal misconduct uncovered by the FBI, which is investigating 14 corporations over possible accounting fraud and insider trading in a crackdown on subprime mortgage lending.
"If there's criminal activity -- and the FBI's investigating it -- heads ought to roll or it's going to be repeated," Grassley said.
The collapse of the housing bubble has revealed deep problems in the market for securitized mortgage debt created in recent years by banks that bundle home loans into investment vehicles sold to institutional investors such as pension funds.
Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz), Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) and Bear Stearns Co Inc BSC.N -- among Wall Street's largest banks -- have all said government investigators want information from them about their activities in the subprime mortgage market.
Some investors in mortgage-backed securities are finding many contain low-quality loans that are now going into default, spawning mistrust in the market and a global credit crunch. Continued...
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