FBI launches probe into sub-prime accounting

A probe in sub-prime accounting has been launched by the Federal Bureau of

The Wall Street Journal reports that the FBI is investigating 14
companies and will concentrate on how the loans were securitised and how
companies packed sub-prime mortgages into the stacks of debt the banks held as
assets. The FBI would not name the companies investigated.

‘The bundling of these loans is so huge, it’s difficult for us to tear apart
each of those bundles and say, “OK, this bad loan is causing this securitisation
to fail”,’ Sharon Ormsby, head of the financial crimes section in the FBI’s
criminal investigative division, said.

Goldman Sachs and Morgan Stanley admitted in their annual reports this week
that government authorities had requested information from them, but both banks
declined to specify which arms of government had made the requests.

Further reading:

Further writedowns expected for US

Bankers sweat over sub-prime

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