[DEBATE] : FBI investigates sub-prime crisis
Riaz K Tayob
riazt at iafrica.com
Wed Jan 30 11:13:48 GMT 2008
FBI investigates sub-prime crisis
The FBI is concerned about mortgage fraud
FBI crime head
The FBI is investigating 14 companies embroiled in the sub-prime
mortgage crisis as part of a crackdown on improper lending.
It did not identify the companies but said the investigation encompassed
developers, sub-prime lenders and investment banks.
FBI officials said the agency was looking at instances of accounting
fraud and insider trading.
The cases could lead to potential civil or criminal charges, the FBI said.
The FBI said it viewed mortgage fraud as an increasing threat to the
It said that there had been 1,200 cases of mortgage fraud for the 2007
financial year compared with just 400 in 2006.
The crisis in the sub-prime lending market has hit financial markets
The FBI said it was investigating the cases with the US market
regulator, the Securities and Exchange Commission.
The SEC has opened about three dozen investigations into the collapse of
the sub-prime market.
Targets of the SEC probe include Swiss bank UBS and US banks Morgan
Stanley, Merrill Lynch and Bear Stearns, Reuters news agency reported.
It was not clear whether any of these firms were involved in the FBI
The sub-prime market is focused on providing home loans to those with
poor or limited credit histories.
Many of these borrowers have been unable to keep up with payments and
face losing their homes.
The wider crisis emerged as many of these mortgages were converted into
financial instruments and sold on to investors including the big
Defaults on these loans caused a steep drop in the value of related
investments and has led to more than $100bn of losses at banks worldwide.
Story from BBC NEWS:
Published: 2008/01/29 22:33:52 GMT
© BBC MMVIII
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