US Senate report on subprime mess due soon-report

NEW YORK, April 2 (Reuters) – A U.S. Senate subcommittee is
nearing completion of a long-awaited report on the role Wall
Street banks played in creating complex securities that fueled
the meltdown of the housing market, according to the Wall
Street Journal.

The report by the Senate Permanent Subcommittee on
Investigations, which has been in the works for months, will
include potentially embarrassing emails and internal
communications from investment banks such as Goldman Sachs
(GS.N: Quote, Profile, Research) and Deutsche Bank AG (DBKGn.DE: Quote, Profile, Research), the Journal said.

It also will discuss a little-known dispute between Goldman
and Morgan Stanley (MS.N: Quote, Profile, Research) that developed in 2008 over one
complex subprime-mortgage backed security called Hudson
Mezzanine Funding, the newspaper said.

The subcommittee learned that Morgan Stanley lost money on
the collateralized debt obligation that Goldman had a hand in
arranging and marketing, the Journal said. The dispute between
the rival investment banks got so heated that Morgan Stanley
considered suing Goldman over its losses, it said.

The Senate’s investigations subcommittee normally follows
up its hearings with reports that outline the findings and
recommend legislative reforms.

An aide to Senator Carl Levin, a Democrat who heads the
subcommittee, declined to comment on the report.

Late last year, two people familiar with the subcommittee
told Reuters that they expected the report to be finished in
early 2011 and said it would contain more information than
surfaced during last year’s series of subcommittee hearings.

An all-day hearing last spring on the role Goldman played
in creating and marketing several CDOs – complex securities
constructed from a pool of subprime mortgaged-backed bonds —
drew particular attention.

A number of current and former Goldman executives testified
at the hearing, including Goldman CEO Lloyd Blankfein.
(Editing by Vicki Allen)

US Senate report on subprime mess due soon-report