FBI Investigating Companies At Heart Of Meltdown

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.


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  • by Wood Location: Washington on Sep 25, 2008 at 03:09 AM
    It's amazing how short peoples memory are and just what they remember. Everyone it seems is so quick to blame the President for all this financial mess, when the fact is he has been constantly reminding Comgress of these very problems and that they needed attention. Read your history, check the records, it's all there like the hand in front of your face, but we refuse to see it. We have an election coming up soon and millions of people are listening to the TV and reading the newspaper for information on the candidates. That's like asking the fox to guard the hen house and then blaming the farmer when the fox eats the chickens. The President can't do much alone, his administration is handcuffed by yes, Congress. Then when a problem occurs, Congress blames the President and we believe them. Check the History records please. If you take the easy way out you get the mess. Check out your Presidential Candidates good, don't believe the media. Thanks.
  • by hope Location: NC on Sep 24, 2008 at 11:06 AM
    I too am thankful the FBI is looking into what appears to be some shady dealings. There may be many layers that need to be peeled away to get to the bottom of this mess, and I hope they are permitted to do this.
  • by hope Location: NC on Sep 24, 2008 at 10:09 AM
    So let me get this right,the controls that were in place since the 30's were relaxed during Clinton's reign. These controls were to prevent another crash of the market. I have read that as a result loans were given out to those that were not capable of paying the debt.

    POST EDITED
  • by Paula Location: Greenville on Sep 24, 2008 at 08:39 AM
    Question: Why haven't the "fat cats" who caused all this financial global failure been investigated and arrested? Is it because a brief investigation on my part reveals most are from the "Ivy League" crowd and are politically attached to the questionable Washington crowd. Why should we be required to pay back what they have stolen from us?
  • by Red State Location: Washington Co. on Sep 24, 2008 at 07:54 AM
    It never ceases to amaze me the way people think these things happen overnight. Short-sighted, uninformed, partisan people think that because Bush and Cheney are in the White House then they must be solely responsible. These business practices started long ago, even I can remember the S&L disasters of the Carter admin., but the rules that led to the current debacle can be laid firmly at the feet of the Clinton admin and those who were elevated to positions of power in these organization by him. Bush has been calling for reform of this industry for as long as he has been in office and did so 17 times in 2008 alone, before the first bail out. In 2005, McCain and three other Republican Senators sponsored reform of the governments involvement in lending. It also was blocked by Senate Democrats. Dodd, Obama, and Hillary Clinton received more money in campaign contributions from Fan & Fred than anyone else.
  • by Anonymous on Sep 24, 2008 at 05:47 AM
    to taxpayer. You have nothing but false hope with Obama/Biden!
  • by VBush Location: MHCY on Sep 24, 2008 at 05:24 AM
    For all of you that think the Democrats hold no culpability here, keep drinking the cool-aide. Your man Biden has been there longer than anyone and I didn't here him sounding any alarms. There is plenty of blame to go around. The question is how are we going to fix it and keep it from happening again? No matter who wins the election......that isn't going to address this problem.
  • by thanks fbi on Sep 24, 2008 at 04:26 AM
    I hope that your investigation is speedy and you lock up all the crooks that have led us to this,,,make them pay for their mess, including our president and vice president that need to be locked up for a long time to pay for the crimes they committed while lying to the american public.
  • by a tax payer on Sep 24, 2008 at 02:58 AM
    I'm sure the CEO's will not give up lavish lifestyle during the investigations. Lock them up along with Bush and Cheney. They have spent the past 8 years telling us the economy has been GOOD...now this? Thanks but NO thanks....we need OBAMA BIDEN and God bless them to lead us out of the mess the GOP has gotten us in..
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