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Credit Suisse investigated over mortgages

  • U.S. federal and state authorities have launched a probe into Credit Suisse AG over mortgage-backed securities packaged and sold by the bank, according to people familiar with the matter.

    The Justice Department and the New York Attorney General are among those looking into Credit Suisse's actions, said the unnamed sources on Thursday.

    A spokesman for Credit Suisse, Switzerland's second-largest bank, declined to comment.

    Zurich-based Credit Suisse is the second bank to be targeted by U.S. authorities as part of an investigation to look into how banks bundled mortgage loans into securities during the U.S. housing boom.

    New York Attorney General Eric Schneiderman filed a civil fraud case against JPMorgan Chase earlier this week over mortgage-backed securities originated and sold by Bear Stearns.

    The lawsuit accuses Bear Stearns of a "systematic abandonment of underwriting guidelines".

    Creating and packaging defective loans for sale to investors was the main cause of the housing bubble and its subsequent collapse.