Sixteen financial institutions are being investigated by government officials as part of their scrutiny of bank actions in the years before the financial crisis, according to a court filing by Wall Street’s largest mortgage due-diligence firm, Bloomberg News reported today. Clayton Holdings LLC, objecting today to a July 1 subpoena seeking documents related to the firm’s work on residential mortgage-backed securities (RMBS), said the U.S. Justice Department was engaged in a “fishing expedition” aimed at collecting massive amounts of data on almost 200 clients. Clayton didn’t identify the 16 institutions being probed by the RMBS working group, a group of federal and state officials that includes the Justice Department. The Justice Department’s financial fraud task force has increased its activity in RMBS cases, suing Bank of America Corp. last month as New York-based JPMorgan Chase & Co. disclosed criminal and civil investigations. Bank of America has denied wrongdoing and said it will fight the suit.
