[ by Melanie Gretchen ]

The Justice Department investigation of Credit Suisse involves mortgage-backed securities packaged and sold by the bank.  The probe, led by U.S. Attorney Paul Fishman of New Jersey, seeks to identify Credit Suisse's step-by-step handling in the mortgage-securitization process.

Federal Task Force.   The case was initiated by the Residential Mortgage-Backed Securities (RMBS) Working Group, a task force created by President Barack Obama in January 2012.  The Group's mission is to coordinate a series of federal and state investigations into the packaging and sale of securities backed by so-called shoddy loans.  Early last year, the Justice Department announced that civil subpoenas were sent to 11 financial institutions as part of its investigation of the RMBS market.

Legal Precedent. The investigation by the U.S. Attorney's office is the latest legal challenge facing Credit Suisse.  In November, the Swiss bank agreed to pay $120 million to settle SEC charges stemming from its sale of risky mortgage bonds to investors before the crisis.  In that same month, New York Attorney General Eric Schneiderman, who co-chairs the RMBS Group, sued the bank on charges it misled investors who lost $11.2 billion in mortgage-backed securities sponsored by the bank.

During his State of the Union address in 2012, Obama said he created the group investigating the packaging of risky mortgages to "hold accountable those who broke the law" and to "help turn the page on an era of recklessness."

For further details, go to [Reuters, 2/22/13].