NEW YORK 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
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
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
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
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)