American investment banks face having their books examined by the US Securities and Exchange Commission (SEC) over concerns that losses from the crisis-hit sub-prime mortgage market may be being concealed in accounts.

The Wall Street Journal reports that Goldman Sachs and Merrill Lynch are among the first who will have their figures checked by the SEC to see whether banks are using consistent methods to calculate the value of their own investments in sub-prime mortgages as well as those belonging to their clients.

According to the Journal, the SEC's initiative has been driven by worries that banks are not marking down the value of their own investments as aggressively as their clients.

Analysts and investors are also confounded by the fact that few investment banks have reported large sub-prime losses despite the current problems in the global financial markets.

It is hoped that the probes into banks' books will reveal any as yet undisclosed exposure from both sub-prime mortgages, where people with a poor credit history are granted home loans.

The SEC are also concerned over losses generated by collateralised debt obligations (CDO), a derivative product which parcels up blocks of debt into one asset, which is then sold to banks and hedge funds. If the debts turn sour, the price of the CDO plunges.

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