Federal prosecutor Lanny Breuer insists he has yet to find enough evidence to bring an indictment against a single Wall Street executive over the 2008 mortgage meltdown, yet lawyers in private lawsuits against the banks continue to turn up some gems — like this one from the Morgan Stanley e-mail vault.

Dated March 2007, the e-mails, being used in a complaint by a Taiwanese bank against Morgan Stanley, show the back-and-forth banter between various executives at the investment bank as they discuss what to name a mortgage-backed security Morgan Stanley was preparing to sell the overseas investors.

One VP at Morgan Stanley suggests “Subprime Meltdown” as a good name. He then follows up with a colorful list:
“Nuclear Holocaust”
“ShitBag”
“Mike Tyson’s Punchout”
and…
“Fludderfish.”

“Just kidding (in case you couldn’t tell),” he adds, probably assuming that his e-mail would never come back to bite his employer on the rear-end.

Yet another executive later chimes in with the suggestion of “Hitman.”

This e-mail exchange is just a small slice of the more than 350 pages of evidence from the Morgan Stanley case published today by ProPublica.

In the end, $415 million of the $500 million package of mortgage-backed securities sold to the Taiwanese investors was worthless. So maybe “ShitBag” was a more appropriate name than the final choice, “Chalfont.”

According to ProPublica, the documents show that, as early as 2005, some sensible folks at Morgan Stanley were trying to raise alarm bells about the drop in quality of the mortgage bundles they were purchasing from lenders. One note calls attention to a borrower, who claimed to make $12,000/month as an “operations manager” at an office that turned out to be a tarot card reader.

But rather than use this sort of information to demand higher underwriting standards, the complaint alleges that hedge fund managers at Morgan Stanley, were using these assessments (which they should not have had access to) to bet against the very securities the bank was selling off to investors. Morgan Stanley denies these allegations.

As for the e-mails with the hilarious names, Morgan Stanley says this is not evidence that the bank had any knowledge that the securities it was selling were as worthless as soggy Monopoly money:

“While the e-mail in question contains inappropriate language and reflects a poor attempt at humor, the Morgan Stanley employee who wrote it was responsible for documenting transactions. It was not his job or within his skillset to assess the state of the market or the credit quality of the transaction being discussed.”

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