Regulators are cracking down on Wall Street´s involvement with the mortgage industry. On December 14^th, the Financial Industry Regulatory Authority (which is Wall Street´s self-imposed watchdog) sent requests to over a dozen brokerage firms for information regarding their sales of mortgage-related products and their marketing processes such as materials used, supervisory policies/procedures, and descriptions on how collateral mortgage obligations were judged. Collateral mortgage obligations are pools of mortgages on residential homes. Investors who buy or invest in these, can get income from the money brought in from mortgage payments; however, if the homeowner misses or cannot make payments, the investor will be left without any cash flow. Therefore, a large default in mortgages equals a lot of investors with negative return on investment.

The request also asks for sales scripts, PowerPoint presentations and sales scrips for the June 30, 2006-July 31, 2007 period. This is being regarded as a sweep or check operation, and does not necessarily imply that law enforcement action will be taken. The firms have until Tuesday, Jan. 8^th to respond.

Many feel that this suggests that the regulators are wanting to look into whether or not brokers sold risky investments to individuals right before the market on the said products was about to fall. That is why they are more specifically looking into the March and June time spans, as that is when the market had taken a drastic below. Investigators are wanting to look into whether or not firms did this deliberately with prior knowledge of the downfall to come, or if they simply didn't disclose the risk to potential investors. They also want to make sure that no senior citizens or retirees were targeted during this period.

In relation to this, many state attorneys as well as the Securities and Exchange Commission are also looking into the actions of Wall Street firms during this period. The SEC is expected to have its own examination later on.