Report: SEC, Banks Discuss Ending Mortgage Probe
U.S. securities regulators are in preliminary talks with several banks to resolve probes involving sales of complex mortgage bond deals that led to the financial crisis, the Wall Street Journal said, citing people familiar with the matter.
The investigation by the U.S. Securities and Exchange Commission (SEC) involves mortgages and other loans known as collateralized debt obligations, or CDOs, that were sold to different investors, the paper said.
Complex mortgage derivative products like CDOs packaged and sold by Wall Street banks were widely blamed for causing the financial crisis more than two years ago.
Settling the allegations with the SEC would resolve one of the biggest legal threats clouding the big banks, according to the Journal.
The SEC, after issuing subpoenas for documents and interviewing officials from leading banks that offered the toxic CDOs, has now begun negotiating with the companies, the sources told the paper.
The talks are at an early stage and settlement terms are still being hammered out by the parties, the sources told the Journal.
A SEC spokesman did not comment to the Journal. The regulator could not immediately be reached for comment by Reuters outside regular U.S. business hours.