Mortgage-backed Securities, Banks | featured news

Morgan Stanley said a group of investors believes the bank may have sold defective mortgage bonds contained in more than $6 billion of trusts, signaling that it may face litigation over its involvement.

Goldman Sachs Group Inc could release documents to counter a Senate subcommittee report that said the bank misled clients about mortgage-linked securities, the Wall Street Journal reported, citing people familiar with the matter.

The government panel, the Financial Crisis Inquiry Commission blames: Banks that made reckless bets, credit rating agencies that endorse risky mortgage-backed securities and government regulators who overlooked warning signs until they threatened the global financial system.

Despite the massive repayments of TARP money coming from our biggest banks, the financial system is still very much dependent on the rescue operations of the government.

Perhaps the best illustration of this is the massive balance sheet of the Federal Reserve, which has inflated by purchases of $1.058 Trillion of mortgage backed securities.

The board that sets U.S. accounting standards voted to adopt guidelines that could reduce the losses banks have been forced to report as the values of their securities have crumbled.

U.S. Treasury Secretary Timothy Geithner will lay out a bank-rescue plan on Tuesday that will rely on public and private funds to take $500 billion of bad assets off banks' books, sources said.