What ever happened to that pile of toxic assets that the banks were sitting on?

Wall Street Journal reporter Michael Rapoport took a look at that the other day.

But banks still hold plenty of the bad assets that once spooked investors: mortgage-backed securities, collateralized debt obligations and other risky instruments. Their potential impact concerns some accounting and banking observers.

In part due to those bad assets, the top 10 U.S.-owned banks had $13.8 billion in “unrealized losses” that have lasted at least a year in their investment portfolios as of Sept. 30, according to a Wall Street Journal analysis.

And:

One problem centers largely on “Level 3” securities, illiquid investments that can’t be easily valued using market prices. According to the Journal analysis, as of Sept. 30, the top 10 banks had $360.7 billion in “Level 3” securities. That amounts to 42.6% of the banks’ shareholder equity, a pile of assets whose value is hard to verify.

The Journal is good to point out, too, that these assets are valued at what the banks say they’re valued at. In other words, they’re marked to myth.

&mdash The Associated Press’s Michelle Conlin takes a look at the demise of Florida foreclosure king David J. Stern, profiled so vividly by Mother Jones last summer.

What’s particularly of interest to us is this somewhat tossed-off quote from a Legal Aid source:

“There’s a David Stern in every state, sometimes more than one,” says Jacksonville Legal Aid attorney April Charney, who has successfully stopped foreclosure for hundreds of Florida families.

Charney may not mean there’s somebody who’s done exactly what he’s done. I’m guessing she means that since laws differ from state to state, that there’s a foreclosure processing mill in each state—probably not as bad as Stern’s, but it sure seems like a good story for metro business reporters.

So who processes the foreclosure filings in your state?

— Speaking of, the Financial Times reports that the SEC is ” homing in on the question of whether investors were misled about the home loans used to back securities.”

Hey, we’re coming up on the fourth anniversary of the CDO bust. But better late than never.

While declining to discuss any investigations, (The SEC’s Kenneth) Lench highlighted areas that could be of concern: “Were representations relating to the transfer or documentation of mortgages into the loan pools accurate? Did activities such as ‘robo-signing’ contradict those representations? Were disclosures to investors regarding the quality of the loans in the pools accurate?”

The same issues are playing out in private lawsuits filed in courts around the country in an attempt to get banks to repurchase faulty home loans.

Yves Smith adds some analysis and an interesting bit of media criticism:

It’s worth nothing that only the Financial Times seems to be carrying this story (yours truly did check on key word variants in Google News and came up empty-handed). They also deem it to be worthy of front page placement. This is only an isolated sighting, but one of the features of the runup to the financial crisis was an ongoing news disparity between the Financial Times and US business press, particularly the Wall Street Journal. The FT would pick up on stories that seemed important and were too often either completely ignored or reported by the American financial outlets only in in a selective manner. So if we see more bypassing of inconvenient news by the usual suspects in the US, take heed.
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Ryan Chittum , a former Wall Street Journal reporter, is deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.