By Emily Flitter
NEW YORK Jan 7 U.S. prosecutors are examining a
new set of Credit Suisse Group AG documents, including
internal emails, that may show whether a bank committee charged
with overseeing the quality of home loans ignored red flags to
the detriment of mortgage investors, according to a source
familiar with the documents.
The internal bank group, called the Watch List Committee,
was established in 2005 as Credit Suisse's mortgage
securitization business grew. Its job was to make sure that bad
loans were not included in securities that the bank sold to
The emails, which have not been previously reported and were
described to Reuters by the source, could play a key role in any
action that prosecutors may decide to bring against Credit
Suisse for its mortgage activities before the housing bust.
U.S. Department of Justice spokeswoman Ellen Canale and
Credit Suisse spokesman Drew Benson declined to comment on the
The emails show Credit Suisse employees complained that poor
quality loans were being allowed to go through because some
members of the committee were focusing chiefly on the need to
generate a large volume of loans, rather than trying to improve
underwriting practices, according to the source.
One of the emails that prosecutors are examining is from
John Vibert, who served as co-head of non-agency mortgage
trading at Credit Suisse in the years leading up to the crisis
and was a member of the Watch List committee, the source said.
In the internal email, Vibert complained that the committee
was "driven by the sales psychology of Mike Fallacara and Chris
Delfs," according to the source. Delfs was the head of RMBS
sales at the time, while Fallacara headed the bank's loan
conduit, charged with securitization and reselling the loans.
Committee members also complained in emails that Delfs and
Fallacara were dominating the committee's activities, the source
Delfs and Vibert declined to comment. Reached by phone in
late December, Fallacara referred Reuters to his lawyer, who
declined to comment on Friday.
Prosecutors have not accused any banker of wrongdoing, and
it is unclear if there will be any action brought against
individual bankers who served on the committee.
Fallacara is now a managing director at Fortress Investment
Group. Delfs joined Toronto-Dominion Bank in
November as a vice president for mortgage capital markets.
Vibert is a managing director and a member of the Securitized
Assets Investment Team at BlackRock Inc.
Credit Suisse is being investigated by the Justice
Department's Residential Mortgage-Backed Securities Working
Group, a network of law enforcement agents and prosecutors -
both state and federal - jointly investigating the mortgage