It’s hard to tell how many residential mortgage-backed securities lawsuits will see the light of day in court. If they do, the resultant court transcripts will reveal just how creative MBS creators can get, for starters, by describing their own RMBS deals as “goat poo,” “lemons” and “pigs.” No doubt the plaintiffs will be less-than-amused over the way sell side spoke of its own deals — internally — while no doubt speaking about the same deals in glowing terms externally. By making the true nature of the deals seem less unpleasant, it is alleged investors bought the confidence of those selling structured finance products they themselves would never buy. Those real intentions, being used as “proof” today, reveal the doublespeak of pre-bust mortgage bond sales. And, lucky for us (and maybe not for at least some of the parties), a few insiders wrote those vivid RMBS descriptions down in e-mail form for everyone, including the lawyers, to enjoy. Wall Street, a little note to self: don’t put your thoughts in e-mail. I know it’s easier than picking up the phone, but come on. We’ve had computers, e-mail and e-discovery for quite some time, so when you’re about to “dog” your own product so to speak, think twice before writing it down. So what led to this discussion? For starters, the latest RMBS case filed against Goldman Sachs by Allstate Insurance includes another instance of an “oops, did I write (or say) that moment?” In the suit, Allstate claims Goldman misrepresented the underlying collateral backing RMBS securities sold to the insurer. In the complaint, Allstate claims Goldman employees once referred to their own securities as “junk,” “lemons,” “crap,” and “dogs.” Similarly, a month earlier, Dexia sued Deutsche Bank for allegedly selling it toxic RMBS. In the complaint, the plaintiff claimed one Deutsche trader referred to the RMBS as “pigs” and “crap.” News reports earlier in the year revealed e-mails in which Goldman executive Thomas Montag described a mortgage transaction as “one S— deal” in e-mail. Not to mention, JPMorgan’s case against Lehman in which they cited a Lehman e-mail where an employee called RMBS, “goat poo.” Since many of the investors suing over RMBS acquisitions claim the quality of the underlying loans were misrepresented to the buyer at the time of the deal, the looming question is how much did the sellers know? Perhaps the answer to that hinges on the upcoming legal definitions of crap, pigs and goat poo — all which will ultimately create a triplespeak of pre-bust mortgage bond sales. Write to: Kerri Panchuk.

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