Senate Investigates Mortgage Fraud at Banks

According to the WSJ, the congressional investigation is focusing on whether internal communications, such as email, show bankers had private doubts about whether MBS they were structuring were as financially sound as advertised to their clients.

Unfortunately, the Senate probe is about four years too late to make a difference to the economy, but at least somebody is going to get in trouble, and maybe we'll have some interesting hearings to watch on TV.

Make no mistake, some juicy emails will be uncovered. If there's anything that Wall Streeters do well, it's revel in the idiocy of the investors that purchase their latest financial concoctions. Does anyone remember the Enron tapes? Or the musings of a young Henry Blodget who publicly rated internet companies a buy, while privately marveling at their crappy business models? How about Jack Grubman, the "highly respected" telecom analyst who relentlessly told investors to buy Worldcom (in addition to around 10 other stocks that eventually went bankrupt) so he could get his kids into a good private school?

As a more recent example, we have the former Bear Stearns internal hedge fund managers, Matthew Tannin and Ralph Cioffi, who await their criminal trial for expressing concerns about their funds' performance a couple of months before the funds imploded.

Written by http://mockthemarket.blogspot.com/