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717
Joined
4/1/2008
Location
USA
Edited Date/Time
1/24/2012 10:17pm
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.
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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The FBI is reading my mind.
Look, if you admit that you are wrong, I'll admit that I'm right and we can move on (and I promise not to edit my conky file to throw you into confusion, geekwad).
I'd say either that's not true, or the folks at AIG and FM/FM that are being investigated didn't expect an investigation to occur if it is true.
You really are quite stupid aren't you? Weeks later..........and I still own your silly ass.
You going to stalk me now?
Yeah...because I owned your lame ass.
Picture a nice home in a nice neighborhood. Two men in dark suits walk up and knock on the nice front door.
Men: Hello, we're from the government, and we're here to help. We're going to rob you for your own good.
Taxpayer: What are you talking about?!! I don't want to be robbed...
Men: Sir, we understand. But our records indicate that you are a taxpayer. Is that correct?
Taxpayer: Of course I pay taxes -- so what?
Men: So, we're robbing you. It really is for your own good. In fact, if we don't rob you, the entire banking system will collapse. You have heard the bad news about the big banking bailout, haven't you sir?
Taxpayer: Look, I don't even have very much money in the bank. Lots of people have a lot more money than I do. Why don't you go rob them?
Men: There's no need to make this about yourself, sir. We are going to rob everyone who pays taxes -- trust me.
Taxpayer: This isn't right. I've played by the rules for years. This is America.
Men: It is indeed, sir. And we're from the American government. And c'mon, sir -- are we supposed to believe that you never took out a subprime loan, never leveraged your home equity into a second and third mortgage, never maxed out four separate credit cards at once, never tried to buy and flip a couple of houses for a fast buck, or that you never speculated even a little bit in the commodities market with your retirement fund?
Taxpayer: No, no, no -- I didn't do any of that stuff. Of course I've got a retirement account, it's in Treasuries, money markets and a stock index fund. I've got two kids in college. I can't afford to get robbed.
Men: We're not here to congratulate you for being a straight arrow, sir. We've come to rob you for your own good. Resistance is futile. Maybe next time you'll go along and raid the candy store when you get the chance. Lots of people did . That's pretty much why we're here to rob you -- for your own good, of course.
Taxpayer: Okay, okay... but... well, if I stop paying taxes? Will you please not rob me then?
Men: That's not a good idea, sir. If you stop paying taxes we'll throw you in jail and rob you anyway.
Taxpayer: This sucks. I'm calling a lawyer.
Men: Yes sir, I'm sure he's a taxpayer too. Let him know that if we haven't been to his house already, we will be soon.
Not only did Government Sponsored Enterprises remove the need for banks to make rational loans, the SEC and Treasury also authorized five firms to increase their leverage limits from 12 to 1 to as much as 36 to 1. Their names might be familiar, although now on headstones: Goldman Sachs, Morgan Stanley, Merrill Lynch, Bear Sterns and Lehman Brothers.
Forbes is right btw....it all perception and mood. Nothing has changed since 2005, the banks were in over their heads starting from 2001 and only now has the last straw been placed on the camels back so to speak.
It's pretty cute that you're going to stalk me now sweetpea...........I must of really crushed your self esteem.........
Pit Row
The reason they are writting them off as losses is because there is nobody willing to purchase them (even those that are current on their mortgages). How do you put a price on something nobody wants? You don't...it's worthless...so you write it off on your books as a loss.
I was watching some dude on bloomberg TV this morning and he was in the business of buying these loans from these large investment banks that nobody else wants. He's buying them at 30 to 60 cents on the dollar. He plans to wait for the crisis to end, the housing market to stabelize and then he'll sell them for face value.
All these mortgages these banks are writting off as losses, and defaulted mortgages...they are mortgages that nobody else wants to purchase, current on payments or not.
Remember, nationwide, only 2% of all mortgages are currently delinquent/in default (that number is rising, however)...that means 98% of all mortgage holders pay their mortgages on time. ( I can't find the cnn.com article that I read that in last week). 2% of all mortgages foreclosing, assuming all delinquent mortgages eventually foreclose, isn't going to cause this mess.
Isn't this exactly what a "bailout" is supposed to be? Except it's not some private speculator buying up the "bad" paper, but some oversight agency backed by the fed?
Stockton, CA has the highest foreclosure rate in the country, and 1 of every 20 homes are in foreclosure/default. And even in that market, the HIGHEST in the country, only 5% of homes are in default.
Then you have the midwest, where 1 in every 498 homes are in foreclosure, and you see why, on average, only 2% in this country are in default.
Post a reply to: Maybe some of those cocksuckers will do time.....