By Emily Flitter
NEW YORK, Jan 7 (Reuters) - U.S. prosecutors are examining a new set of Credit Suisse Group AG documents, including internal emails, that may show whether a bank committee charged with overseeing the quality of home loans ignored red flags to the detriment of mortgage investors, according to a source familiar with the documents.
The internal bank group, called the Watch List Committee, was established in 2005 as Credit Suisse's mortgage securitization business grew. Its job was to make sure that bad loans were not included in securities that the bank sold to investors.
The emails, which have not been previously reported and were described to Reuters by the source, could play a key role in any action that prosecutors may decide to bring against Credit Suisse for its mortgage activities before the housing bust.
U.S. Department of Justice spokeswoman Ellen Canale and Credit Suisse spokesman Drew Benson declined to comment on the investigation.
The emails show Credit Suisse employees complained that poor quality loans were being allowed to go through because some members of the committee were focusing chiefly on the need to generate a large volume of loans, rather than trying to improve underwriting practices, according to the source.
One of the emails that prosecutors are examining is from John Vibert, who served as co-head of non-agency mortgage trading at Credit Suisse in the years leading up to the crisis and was a member of the Watch List committee, the source said.
In the internal email, Vibert complained that the committee was "driven by the sales psychology of Mike Fallacara and Chris Delfs," according to the source. Delfs was the head of RMBS sales at the time, while Fallacara headed the bank's loan conduit, charged with securitization and reselling the loans.
Committee members also complained in emails that Delfs and Fallacara were dominating the committee's activities, the source said.
Delfs and Vibert declined to comment. Reached by phone in late December, Fallacara referred Reuters to his lawyer, who declined to comment on Friday.
Prosecutors have not accused any banker of wrongdoing, and it is unclear if there will be any action brought against individual bankers who served on the committee.
Fallacara is now a managing director at Fortress Investment Group. Delfs joined Toronto-Dominion Bank in November as a vice president for mortgage capital markets. Vibert is a managing director and a member of the Securitized Assets Investment Team at BlackRock Inc.
Credit Suisse is being investigated by the Justice Department's Residential Mortgage-Backed Securities Working Group, a network of law enforcement agents and prosecutors - both state and federal - jointly investigating the mortgage market meltdown.
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