SEC, FBI Investigate Subprime Lending

WASHINGTON — The Securities and Exchange Commission has launched 50 investigations across a wide swath of the subprime lending industry. SEC Chairman Christopher Cox recently told Capitol Hill lawmakers that investigation targets include subprime lenders, securitizers including investment banks and credit rating agencies as well as the banks and broker-dealers who sold mortgage-backed investments to the public.

The agency is looking into whether mortgage lenders properly accounted for the loans in their portfolios, whether they established appropriate loan-loss reserves and whether lenders adequately disclosed the risk profiles of loans in connection with the sale of mortgage-backed securities and collateralized debt obligations.