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Jan 8 (Reuters) - Federal regulators are probing whetherseveral big banks deliberately mispriced mortgage bonds in theyears following the financial crisis, the Wall Street Journalreported, citing people close to the inquiry.
The new investigation is a potential blow to the banks asthey have already paid billions of dollars in penalties andfines to various federal agencies following scrutiny of theirconduct leading up to and during the market panic of 2008.
Banks continued to hold billions of dollars in hard-to-priceassets on their books even in the aftermath of the creditcrisis.
Regulators are now seeking information about whether banksmade "significant misrepresentations" about some of those assetsto make deals, the Journal said. ()
The probe focuses on whether traders bought or soldresidential mortgage-backed securities at artificially depressedor inflated values from around 2009 through 2011, the papersaid.
The other parties in such deals would typically be rivalbanks, hedge funds and other large investment firms, accordingto the paper.
The banks being probed include Barclays Plc,Citigroup Inc, Deutsche Bank, Goldman SachsGroup Inc, JPMorgan Chase, Morgan Stanley,Royal Bank of Scotland Group and UBS AG.
The investigation, which began less than a year ago, isstill at an early stage and may not lead to enforcement action.Subpoenas have been sent to several firms to gather information,according to the newspaper.
The probe is being conducted by the Securities and Exchange(SEC) and the special inspector general for the Troubled AssetRelief Program (Sigtarp).
Spokesmen for the SEC, Sigtarp and JPMorgan declined tocomment to the newspaper.
RBS spokeswoman Mary Taylor declined to comment to Reuterson the Journal report.
None of the other parties could immediately be reached forcomment by Reuters outside of regular U.S. business hours.
