Business | Banking
FBI scanner on Fannie Mae and Freddie Mac
The FBI is investigating Fannie Mae, Freddie Mac, Lehman Brothers Holdings Inc. and American International Group Inc. in its probe of the collapse of the subprime-mortgage market, according to a senior law-enforcement official.
- Agencies
- Published: 23:39 September 24, 2008
New York: The FBI is investigating Fannie Mae, Freddie Mac, Lehman Brothers Holdings Inc. and American International Group Inc. in its probe of the collapse of the subprime-mortgage market, according to a senior law-enforcement official.
The companies are among 26 being reviewed by the Federal Bureau of Investigation for possible accounting misstatements, said the official, who asked to remain unidentified. The investigations are preliminary, the official said late last day.
The FBI has come under pressure to hold companies responsible as the loan crisis rocked Wall Street and led to the biggest housing slump since the Depression. Financial companies worldwide have reported more than $500 billion in losses and writedowns stemming from the subprime collapse.
Restructuring process
Housing lenders Freddie Mac and Fannie Mae, as well as insurer AIG, were all taken over by the government this month.
Lehman filed for bankruptcy. The crisis has led the Bush administration to ask Congress to approve a $700 billion bailout for the financial industry.
James Lockhart, the director of the Federal Housing Finance Agency, tossed out both Fannie Mae's and Freddie Mac's boards and top management, including former Fannie Chief Daniel Mudd and Richard Syron at Freddie, as part of the restructuring.
Freddie Mac spokesman Doug Duvall declined to comment on the FBI investigation. Fannie Mae spokes-man Brian Faith wasn't immediately available for comment. AIG spokesman Nick Ashooh declined to comment as did Mark Lane, a spokesman for Lehman.
The investigations into Fannie Mae and Freddie Mac were recently opened, said the official. The agency had already been looking into allegations concerning Lehman and AIG. The Securities and Exchange Commission is also investigating the companies for civil violations.
People familiar with the matter have said earlier that other companies under FBI investigation include IndyMac Bancorp Inc. and Countrywide Financial Corp.
FBI Director Robert Mueller last week pledged to "pursue these cases as far up the corporate chain as necessary to ensure those responsible receive the justice they deserve".
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