FBI Investigating Companies At Heart Of Wall St Crisis

WASHINGTON — The FBI is investigating four major U.S. financial institutions whose collapse helped trigger a $700 billion bailout plan by the Bush administration, The Associated Press has learned.

Two law enforcement officials said Tuesday the FBI is looking at potential fraud by mortgage finance giants Fannie Mae and Freddie Mac, and insurer American International Group Inc. Additionally, a senior law enforcement official said Lehman Brothers Holdings Inc. also is under investigation.

The inquiries will focus on the financial institutions and the individuals that ran them, the senior law enforcement official said.

The law enforcement officials spoke on condition of anonymity because the investigations are ongoing and are in the very early stages.

Officials said the new inquiries bring to 26 the number of corporate lenders under investigation over the past year.

Spokesmen for AIG, Fannie Mae and Freddie Mac did not immediately return calls for comment Tuesday evening. A Lehman spokesman did not have an immediate comment.

Just last week, FBI Director Robert Mueller put the number of large financial firms under investigation at 24. He did not name any of the companies under investigation but said the FBI also was looking at whether any of them have misrepresented their assets.

Over the past year as the housing market cratered, the FBI has opened a wide-ranging probe of companies across the financial services industry, from mortgage lenders to investment banks that bundle home loans into securities sold to investors. Mueller has previously said the FBI's hunt for culprits in the nation's subprime mortgage crisis focused on accounting fraud, insider trading, and failure to disclose the value of mortgage-related securities and other investments.

The investigations revealed Tuesday come as lawmakers began considering whether to approve emergency legislation that would give the government broad power to buy up devalued assets from troubled financial firms.

The bailout proposed by the Bush administration is aimed at helping unlock credit and stabilize badly shaken markets in the United States and around the globe.

In the past two weeks, the government has taken over Fannie Mae and Freddie Mac, the country's two biggest mortgage companies, with a bailout plan that could require the Treasury Department to put up as much as $100 billion for each of them over time if needed to keep them afloat as mortgage losses mount.

Last week, the Federal Reserve provided an emergency $85 billion loan to AIG, which teetered on the brink of bankruptcy. Lehman Brothers was forced to file for bankruptcy after attempts to engineer a private rescue fell apart. All the companies were laid low from bad bets on complex mortgage-related securities.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke made the joint decision last week that the only way to stop the carnage was to deal with the root cause of all the troubles, billions of dollars of bad mortgage debt sitting on the books of major financial companies. This debt has triggered the worst credit crisis in decades, causing credit markets to essentially freeze up despite the fact that the Fed joined with major central banks around the world to pump billions of dollars of reserves into the financial system.

Additionally, the FBI is investigating failed bank IndyMac Bancorp Inc. for possible fraud. Countrywide Financial Corp., formerly the nation's largest mortgage lender and now owned by Bank of America Corp., is also under scrutiny.

Comments

[imsosure]

I think the FBI ought to have better things to do than try to figure out what is obviously a matter that is out of their jurisdiction and unnecessary. And so what if they think they have found out something we don't already know, it's sounds more like a witch hunt to divert the truth from coming out. I am so glad Bush is leaving soon, along with Herr Cheney and the rest of their lying and stealing cronies. Perhaps the future will bring some plans for allowing the common sense , the obvious and unconvulted to raise to the top of the pile so that the country can move forward and not need to try to undo the messes created by uncontrolled greed and corruption like that seen in the past 7 or so years. A little common sense and patience goes along way in keeping the American people out of these sort of issues as we have now, and just trying to do the right thing will go a lot further than intentionally making efforts to extend a hand in aiding the corruption we are living with.

[PhantomAviator]

..

"You don't need a weather man to know which way the wind blows."

.

[landoffools]

The FUBAR (FBI) can't find their ass with both hands !

[fullorage]

The law enforcement officials spoke on condition of anonymity...... hmmmm,
This sounds familiar. Hi Karl!
The rethugs are looking for anything to make them look like they are doing something since the whole world is about to blow up in our faces.This is due to American malfeasance of the money of,not just other people,but other countries. And China is pissed big time.

[wdw101]

oh no say it's not so, china is pissed.........why because we have lead free mortgages

[Chavez08]

I know Rupert Murdoch worries alot when China is pissed....

[zanbama]

I heard they are going to investigate real estate companies too. I remember 4 years ago a realtor tried to get my husband and I to puchase a house with an ARM. I was going to accept the offer....I didn't know what it was. I called my mom and she told me not to accept it because it was not the right move. I wanted a house really bad but it was a no go even while she begged us to take it. I hope she goes to jail esp. if she swindled someone else.

[landoffools]

Lesson #2

Realturds are crooks !

[Trevdee]

It's nice to know that the FBI has decided to investigate Wall St. firms and banks (as well as the executives who ran them) for their roles in the financial crisis in which we find ourselves. While I hope that there will be prosecutions at the end of the day, I will not be happy if the guilty parties do time in one the Fed's country club prisons. I would hope that they do time in a regular prison with some of the other murderers, robbers, and rapists. After all, if a robber breaks into someone's home and the homeowner dies from a heart attack brought on by the trauma then that robber, when arrested, is not only charged with b&e and robbery but also w/murder. If folks have died because of the actions of investment banking execs as well as regular banking execs then the morons should be hit up w/murder charges and do some serious time in the pokey with and among those who are considered as the 'scum' of society. Unfortunately, the likelihood of this happening is about as likely as a snowstorm in the Sahara Desert at high noon.

[grizhead63]

I'm just glad they are investigating. The FBI is probably the least politicized branch of government left in this wondrous administration.

[Nyla785]

Someone should be investigating Paulsen and Bernanke too. This '3 page plan for 700 billion' looks insane. What did it consist of? "We need 700 billion--give it to us NOW!"??
That's insulting to the American public who is footing the bill on yet another Bush term debacle, and we shouldn't stand for it anymore.

[Voltage]

The repugs are hunting for scapegoat.

[dhfsfc]

When is it going to expand into Goldman and Morgan Stanley?

After we've signed away our lives to Hank Paulsen?

[KBAR]

http://www.opensecrets.org/pres08/contrib.php?cycle=2008&cid=N00009638.

[deliriousgod]

omigod! Obama took money from the University of California! and Harvard! those are both places!

[kfdan]

" ... FBI is looking at potential fraud by mortgage finance giants Fannie Mae and Freddie Mac, and insurer American International Group Inc. "

This is a great recommendation for allowing banks and financial institutions to run the show! Bring back strong government supervision and make these criminals accountable ... while we are at it, let's think of a way to have the government investigate itself ... these financial criminals had a lot of inside help!

[KBAR]

Frank Raines was caught cooking the books. Yet, he walked away with 90 millions bucks

[AshevilleVoice]

Now we're really down the rabbit hole.

Catharine Austin Fitts, former HUD auditor, has spoken out about HUD's cooked books and the mortgage fraud cover ups for years. This marginalized woman may be the only voice of truth out there.

If she is correct, some houses have up to 8 mortgages written and then resold. Which may explain why Paulson wants so much privacy and secrecy in his "bailout." Because underlying the bad mortgage crisis may be fraudulent mortgages with no assets whatsoever. And years of govt collusion in this fraud at the highest levels.

[KBAR]

Frank Raines was caught cooking the books. Yet, he walked away with 90 millions bucks. Now, Raines and Johnson are on Obama's team and Obama was number 2 in money received fromFreddiee and Fannie Mae. Chris Dodd was number one.Fellow Americans, wouldn't you like some of the money back that Raines and Johnson stole from you. Raines made over 90 million, lets make him pay some back.

[Marlyn]

WRONG . KBAR distorts the truth.

Jim Johnson was on the Obama team for a few days, not as a financial advisor, but to help Obama choose his VP. But as soon as Johnson was named there were complaints and he withdrew.

[CassandraPriam]

So nice to know that these crooks will have plenty
of taxpayer money to lawyer up.

[ReelBusy]

It's all about the McCain "Economy" now isn't it?

MCCAIN & PALIN in BEAUTY & the BEAST
Featuring the McCain Economy Chorus

http://www.youtube.com/watch?v=QiItoHftv4A

[anney]

And American taxpayers are expected to bail out these firms that are being investigated for fraud? Investigate and resolve before daring to approach American taxpayers with a hand out and a plea for money.

[vippy]

Why the investigation, so it turns out to be our fault? Like we bought homes we could not afford
when everyone knew, looking at the billions of dollars CEOs got for bonuses, that they were
taking us to the cleaners. They claimed the economy was good, etc. remember FOX NEWS
spouting we don't have a recession, then the bomb explodes and boom, the markets are melting.
Fire the crooks! There is no other way out., the little guy gets screwed over and over and they
get to keep their money.

[GrainOSand]

I will wait to see if the process of investigation lapses into a political crusade to settle political scores and vendettas. The Justice Department does not have my total confidence these days at the leadership level. Any real prosecution is reported to be years out, so this issue could be used during an Obama administration to make hay. That is how shysters work. The setup is done long before the payoff. I realize my analysis could be nothing more than my overactive imagination, but one of the ways "I do not get fooled again" is to allow for all reasonable possibilities. This is not to be confused with committing to any one possibility. A healthy measure of paranoia does a plan of preparedness good. These people really think they are playing chess and they sit around in their cushy and heavily cushioned chairs smoking expensive pipe tobacco, cigars, and weed, sipping on cognac or brandy and playing chess with the lives of real people. They are that sick otherwise we would not be in Iraq. Someone drew Iraq up on a napkin, not literally, but in terms of the thought that went into it.

[spinoza1111]

The paradox of that rock anthem "we won't get fooled again" by the Who is that the people who sang along did get fooled again: that the postmodern/libertarian belief that an abstract general skepticism, a mask in fact for passivity and ignorance, would cause people to "not get fooled again".

I've met a lot of "libertarians" and professional "skeptics" who label common knowledge "conspiracy theory". For example, they don't know, when watching Mel Gibson and Sigourney Weaver in Peter Weir's 1983 film "The Year of Living Dangerously", that a Third World socialist, Sukarno, was overthrown by Suharto and Moslem generals in 1965 with the connivance of, and to the benefit of, the United States and conservative Australian interests as a matter of the historical record, and will, in their "skeptical" mask for their actual ignorance, decry this account as some sort of left-wing conspiracy theory.

But today we see Hank Paulson and Ben Bernanke actively and in full view conspiring to impoverish and destroy America's working and middle classes with Suharto's brutality, tearing up the Constitution, and it's hard to be "skeptical" when your bank fails or your taxes are increased by two thousand dollars to pay for bankers' houses.

[GrainOSand]

spinoza:

That is why I allow for all possibilities until disproved and that is why I say the amount that I know is only dwarfed by the amount I do not know. Perspective for me comes from acceptance, to say that no matter what is occurring, all that I can control is me, and then only to the degree that I have not been indoctrinated to operate against my own interests and my own nature. The lives we are asked to live are foreign and unnatural because they have been manipulated on certain levels to prop-up evil. Transformation, I am fast coming to believe -- will only happen through great tragedy. Who wants to go on a hunt with steak, potatoes, and carrots steaming on the plate today? It is difficult for such people to imagine a tomorrow without steak. It is difficult to imagine a world without a clean water source. These are within the realm of possibility however and so are energy wars, concentration camps for American citizens, a repeal of Roe vs. Wade, dismantling of Medicaid and social security, and numerous other startling events that could shock a gullible and distracted nation.