FBI investigating fraud at Fannie/Freddie/Lehman/AIG
The FBI is probing financial fraud at the nation’s giant financial institutions. Better late than never, I guess.
AP:
The FBI is investigating four major U.S. financial institutions whose collapse helped trigger a $700 billion bailout plan by the Bush administration.
Two law enforcement officials said the FBI is looking at potential fraud by mortgage finance giants Fannie Mae and Freddie Mac, Lehman Brothers Holdings Inc., and insurer American International Group Inc.
A senior law enforcement official says the inquiries, still in preliminary stages, will focus on the financial institutions and the individuals that ran them.
Officials say the new inquiries brings the number of corporate lenders under investigation over the last year to 26.
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Trackbacks
- To Those Responsible: A Major Media Outlet Has Outed You! « Pocket Change - Now Lint Free!
- Hot Dog FBI Finally Looking At Fannie/Freddie/AIG/Lehman Fraud « Mcnorman’s Weblog
- Hot Air » Blog Archive » Video: Who’s responsible for the Fannie and Freddie mess? Update: FBI launches investigation
- In Plain English: How Did The Biggest Financial Scandal in History Happen? « The IUSB Vision Weblog
- The Mortgage Crisis In A Nutshell « Beltway Snark
- Stop The ACLU
- Fraud Investigation at Fannie/Freddie/AIG/Lehman « The Shining City On a Hill
- The for F’s! Fannie, Freddie, and Financial Fraud! « The Daley Gator
- More proof Democrats let financial crisis happen | Conservative247
- PAXALLES
- Alan Greenspan and the Federal Reserve Warned Congress - Greenspan Testified for McCain’s Bill to Fix Fannie Mae and Freddie Mac in 2005 - Democrats Blocked it in Party Line Vote! « The IUSB Vision Weblog
- Whose to Blame for the Fannie-Freddie Mess « Truth and Reason
- Cop The Truth
- The Rude News » Blog Archive » FBI Looks @ Fannie & Freddy…
- WeatherOutpost12
- FBI investigating fraud at Fannie/Freddie/Lehman/AIG « Thoughts Of A Conservative Christian
- Alan Greenspan and the Federal Reserve Warned Congress - Greenspan Testified for McCain’s Bill to Fix Fannie Mae and Freddie Mac in 2005 - Democrats Blocked it in Party Line Vote! « The IUSB Vision Weblog
- Corruption You Can Believe In: Failed Sub Primes and Mortgage Fraud Lenders Funneled Money to Dodd & Obama the Most. Fannie & Freddie Gave $200 Million to Partisans-Most Went to Democrats! Dodd, Obama Among Top Recipients. Republicans Attempted to
- Bush Administration Warned Congress Over 20 Times Reforms Were Needed « The IUSB Vision Weblog
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Categories: Subprime crisis
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Look out team Obama – note the past-tense! Portent of October `08, maybe?
I hope they are arranging for cells next to Key Lay.
But, will they also investigate Barney “Mushmouth” Frank? And for that matter, all the other politicians who collected millions off this?
What are we, in a time-warp? How long do these crises have to unfold before the investigations begin?
As for me, I want public mug shots and names, as well as the perps’ portfolios exposed. I want public humiliation for all of these people, from the lenders who sold these loans to the idiots who signed loan contracts for $300,000 houses on a $30,000/year salary. I want thousands to go to jail, not just a few “examples.”
And I want congressmen to go to jail for forcing this nonsense on the industry.
Don’t know how to break it to you…but Ken Lay has been six feet under for the last two years.
Actually, that deal sounds even better! LOL!
Next, they need to go after Congress.
Nancy Pelosi said that CEOs shouldn’t get golden parachutes after running their companies into the ground. I think Congress should suffer the same consequences after running our country into the ground.
According to the National Taxpayers Union (ntu.org), Congress’ pension plan is two-to-three times more generous than most similar-salaried corporate executive pension plans, with taxpayers footing about 80% of the payment.
Thanks God.
Too little too late mostly, but now we can get rid of the crooks…hopefully.
And not elect one blind one(zreobama) to office.
If this goes anywhere. Congress is working of this bailout bill now and I cant stop thinking about a statement made by Einstein (i think):
You can not fix a problem with the same mind(s) that created the problem.
Maybe the Senators who received contributions from these firms should throw that money in with the taxpayers’ bailout cash.
O/T from earlier-
patterico.com is back on line, or accessible anyway.
Yah! Right! That’ll happen!
Let’s be happy something is being done. Maybe this will scuttle (or at least delay) the bailout.
I sure hope they have some serious speed to inject into their investigation.
If the individuals whose names turn up are powerful enough, it will all get swept under the rug.
If this had happened to institutions uninvolved with the government, a lot of people would be doing a perp march.
As a credentialed pofessional who has a ringside seat while witnessing this mess (including one of the collapses discussed on this site) I would not bet against massive fraud at any of the institutions under discussion.
Freddie Mac and Fannie Mae, because they were not run by professionals but political appointees who felt they had a blank check. For other companies, it’s a cover up to make more money and to hide mistakes long enough for a recovery to mask them.
I’m open for questions.
Thanks Michelle for your work.
Wow! I live almost 2 miles from Wall St. but I can hear the shredders from here… Oooooh & now the lights are flickering.
Like shooting fish in a barrel.
What a mess. The FBI had better have good cause to start up this so called probe. We get our hopes up that some real truth will come out with the bad guys given their due.. and then it all fizzles…
I feel like a guerilla with low blood sugar when I see this stuff, especially how it’s “bounced” Obama.
my understanding, is that even though these were run by political appointees that the books were cooked in order for them to get those hefty bonuses. they had to show that there was money being made. and, alas, we know there wasn’t any money being made by Freddie and Fannie. as far as lehman and aig not so sure, but where there is smoke there usually is fire.
i hope that there is not a bail out and they let it all fall. if we give them the bailout.. there will just be more of the same later on down the road. we need to stop this socialist madness.
That’s what it needs to say. I know it won’t happen, but a girl can dream, can’t she?
I wonder if they’ll look into the influence of “community organizers” to force banks to make loans to unqualified borrowers.
http://townhall.com/columnists/NealBoortz/2008/09/19/the_rest_of_the_meltdown_story
Here’s a crazy idea…
If we were to let the bailout go through… and allow the fed to buy up all those bad mortgages…
What if we enforced collections on those loans using the IRS?
After a little BOHICA lovin’ from the IRS, I bet people would think twice before pulling out a bigger loan than they could afford next time around.
Get them, FBI…send them to the hole…put the blame for this mess squarely on the shoulders of who caused it…O’s “friends”
Expect a report on Nov. 5
It is my full expectation that Raines, Johnson, Mushmouth, Chuckie, and every other politician involved is investigated.
If guilty, I demand they are tried, convicted, and hung.
I’ll settle for jail time, though.
… and expect it to be heavily influenced by BDS. All roads will lead to the Bush Administration. Sad.
this was the example of affirmative action for mortgages, that pc everyone equal and deserves equal opportunity despite their inability to pay it back! how dare you profile and verify if they have a job or make enough money to pay it back. sounds familiar.. how dare you enroll them based on only their test scores…how dare you hire them based upon their experience…
we have the affirmative action candidate and the affirmative action crew to thank for this mess…
i’m with roger from sd…i’ll take jail time but prefer hangin’
Jamie Gorelick.
Nope. If McCain wins, he’ll want to show he’s bipartisan. If Obama wins, he’ll want to cover up for his friends/contributors. Either way, whatever report comes out won’t show up for years, and that’ll be a whitewash.
nope they’ll appoint a commission and make sure the guilty are on the commission.. just like the 9/11 commission did by having Jamie Gorelick…
that’s the only way to investigate! stack the deck.
Will they go all the way back to Jimmy Carter’s influence?
News AT 11:00? Don’t count on it. The Press has abdicated all responsibility. Who is responsible New Media is burying old media?
http://www.youtube.com/watch?v=usvG-s_Ssb0
The point is that voters won’t have the opportunity to see this information until after the election.
Maybe not, but if they get the houses without paying for them, that’s income – and the IRS could go after them for the taxes on that.
It’s just sickening that since this happened on Bush’s watch, the Palin/McCain team suffers in the polls. It was liberals with the same victim mindset as Obama who literally forced financial institutions, under threat of federal lawsuit, to make loans to people with no or bad employment and/or credit histories. Affirmative action has come home to roost, and who gets the blame? Those who were fighting against this failed social tinkering all along.
I worked at a Savings and Loan in the 1980’s and the pressure to make loans to minorities with poor credit was intense even back then. And of course, Palin/McCain can’t bring this up without the predictable massive condemnation of their “racism” that would be sure to follow.
While I am certain that the information must be reasonably easy to obtain, especially if the media wanted to get it, how come we are not getting any statistics like:
- the number of illegal aliens that have defaulted
- the number of various ethnic and racial groups that have defaulted
- the number of people who could have easily continued to make the payments, but simply walked away from the mortgages because they were unhappy when the decline in real estate values made their property worth less than the amount they owed.
- defaults by region, state and city that would no doubt highlight liberal urban areas.
This makes me, as a life-long renter, doubly disgusted.
Democrats chickens are coming home…to roost?
And my point is that election or not, you’re not going to see anything that makes Democrats look bad, anytime.
Will the FBI investigate ACORN while they’re at it?
I live in SoCal.. I would say 90% of the foreclosures are due to illegals. At least most of them do not or are not able to speak English as their first language. This was a drive to make sure that if found illegal they could not be deported, as well. Once they own property, it is difficult to find them deported for any reason. Of course, that is if they were actually enforcing the laws.
This is the result of affirmative action in the mortgage business for sure…as well as a drive towards amnesty..yes a double edged sword..
Another indication why we need term limits. Politics should not be a career choice, politician’s next line of work is usually as a well-paid lobbyist, and the greed continues. The cesspool that we have in D.C. is aided an abetted by their friends – this time on Wall Street. The taxpayer doesn’t get to belong to the club – just pay for it when they screw up.
I’m not sure if I’ll ever see the FBI really go after the root instead of the branch on the tree.
This will bring to light next to nothing. Not even FOX news will dare touch this one. The Democrats screwed up the economy and they not only will get away with it, they will walk away winners.
uhangtight 42, I second that as I see it all the time. I went to the WAMU bank today to withdraw some money and standing in the line, I was the only one that wasn’t speaking in Spanish. It’s not because the were doing it because they feel comfortable, but because they can’t speak English.
Wake me when Chris Dodd and Barney Frank resign.
Where is Henry “Bobo” Waxman?
He wants to drag everybody before his committee. Karl Rove sneezes into a tissue, Bobo wants him frogmarched in for mis-appropiation of governement tissue.
700 Billion Dollar bailout of quasi-government entities, BoBo Waxman can’t be found.
Typical…
It’s about time….now frog march them to jail and take the thieves in Congress with them!
Of course, here’s the angle the big media will be pursuing.
Indeed.
Something is wrong with the math here…
I don’t know but it seems to me that if there are 300 to 350 million people in the country including illegals, than the whole country illegals & all could be bailed out for 350 million max…
so uh, where does the other 699.66 BILLION go?? Maybe the FBI should look into that. just saying.
Thank goodness the FBI is investigating. Given the power of some of the “playahs” though I don’t see much of a result.
Banksters.
I can’t see the FBI finding anything. The evidence is right in front of their faces but they won’t find anyone, watch!
I can see the headlines if this is for real
“Obama’s two trusted advisors arrested by FBI for deceiving and defrauding Fannie Mae / Freddie Mac during their reign.”
So much for Sarbanes Oxley. Another worthless, useless regulation.
Don’t worry, they’ll be thrown under the bus by then.
Oh please! PLease! Please! Let Barney be sentenced to the electric chair and let me throw the last switch!
On September 23rd, 2008 at 8:25 pm, Kaitian said:
I can see the headlines if this is for real
It is as real as the war on poverty. Think about it. For only 350 million, every man, woman & child in the country could be a millionaire (for a day anyway) how’s that for a stimulus program?
http://hotair.com/archives/2008/09/23/video-whos-responsible-for-the-fannie-and-freddie-mess/
He’s too busy telling everyone to put out their cigarettes.
I heard that! How about the creeping Spanish on the deposit slips! At WAMU, I used to be irritated by the (then) very light sub-heading type font for Spanish on the primarily English slips. Now Spanish is sharing the paper 50-50 with English, making it difficult to read. How long before English will be an italicized ghost font on a Spanish deposit slip?
Good point. Does the bus have any traction though? I mean with the amount of people he’s thrown under there, you think it can’t touch the ground anymore?
I heard he has a fleet of buses now.
It’s a shame; The MSM used to be at their best in rooting things out, as in the underlining corruption regarding this entire mortgage scandal; The tentacles reach outward into both parties, banking institutions, underwriters, illegal immigrant advocates, appraisors, and on and on; Then the FBI would take over; But not anymore; The biggest scandal by far ever perpetrated on “we the people” by our representative government, and the MSM has taken a pass to get Obama over the finish line.
Step 1: Give me $700 billion now.
Step 2: Make me unaccountable and not subject to review.
Step 3: Forget that I am connected to Wall Street and to politicians connected to it.
Step 4: Trust me.
For a second Michael Chertoff was all excited…
D’oh!
Kind of along the lines of Al Gore. Maybe they realized they weren’t going to get our money that way.
If any kind of bailout, or help is given by Congress to investment banks that cooked their books, then I hope we will not be giving billions to Egypt, Africa, Mexico, etc…
genso said:
Kind of along the lines of Al Gore. Maybe they realized they weren’t going to get our money that way.
You know, your right… I had not thought of that. Credit where it is due.
Paulson indicated that foreign banks may be included. Plus, the first vote will be to increase the debt limit to account for the 700 billion. Has the debt limit ever been retracted?
I wonder what people would think here if I told them that I used to basically issue the the tax opinions for the mortgage backed securities Fannie Mae bundled and sold….
I think I will keep that to myself…
Actually, for 350 million each person would get $1. 700 billion represents about $2000 per person if we have 350 million people. Not that I disagree with the position that we shouldn’t be paying it, just pointing out the math.
Whr-r-r-r-r-r-r-rrr!!!
And the sounds of massive shredding continued into the night……
Well, hell, since they are throwing around freebies at taxpayers expense, where is mine?
/snarc
The Wall Street Journal warned of that last year. They were cows to be milked.
—
Hey Obama-Want to see a Bitter American?
Look at your wife.
teachem2, I don’t know… 350 million people @ 1 million each, comes out to less than 800 billion. a LOT less.
Ohhh alll thoes extra zeros… guess you are right
I stand corrected, thank you curt. But, still, i don’t think anyone will get personal on this. I live in So. Cal and supposedly there was a freelance journalist who went to a WAMU here and asked about home loans to illegals and about the risks. He was told that the beauty of it was if the illegal gets deported, the house goes back to the bank where they could sell it for more, so they always made money. This infuriates me.
No wonder…
Min. 20 years prision, $100,000,000 fine, 20,000 hours community service, and banned from any contact to any financial work for life.
But it is unlikly any charges will be brought against any democrat (immunity remember).
The “investigation” will drag on for 18 months. At that point a special counsel will be appointed. He will decide that Scooter Libby is guilty.
A special “blue ribbon” commission will be created, headed by Jamie Gorelick and Franklin Raines. The commission will conclude that it is all Bush’s fault.
Our grandchildren will be paying the bill when they retire.
What? Really? Sounds like someone used to work for Fannie/Freddie/Lehman/AIG.
(BTW: 350,000,000 x $1,000,000 = $350 Trillion, while 350M x $2,000 = $700 Billion)
Back up. We have lots more folks to be showin’ off. Exhibit A) Janet Reno: You will stop redlining bad neighborhoods and give those people loans or I will come down on you like a ton of bricks.
Exhibit B) Congress: Everyone, regardless of income, should have the opportunity to own a home in America or we will come down on you like a ton of bricks.
My dream would be to see Franklin Raines and Jamie “The Wall” Gorelick, with their backs to the camera, walking away, when a reporter calls to them. They turn around — in the process, lowering the grips on their wheelbarrows, filled with cash.
Next scene: mug shots of Reno, Clinton , Jimmah Carter (Rush said he was the impetus for all of this mess), Chuck U Schumer and Chris Dodd.
I would also like to see footage of this crew wearing black and white striped outfits, with ball/chain ensemble, making little rocks out of big rocks.
Mitsubishi, Nomura and Warren Buffett are already snapping up the good bits. My $2233 share will be a cluster of homes in Detroit…
It’s precisely regulation and political meddling with financial markets that leads to companies using the government as their safety net. Should we be surprised that this led to reckless lending and harebrained derivative schemes, when thanks to Uncle Sugar the financial sector faces no consequences for its actions? Far from there being too little regulation, there’s far too much of it, and while I have no doubt that there was fraud going on, the ultimate source of the rot lies in government intervention. However, no one is calling for less regulation, but more, even in some sectors of the Right.
Corrected it for you
Heck, let me fill you all in on what little piece of the puzzle I can on all this.
As I intimated, I used to work in the tax department on the firm that basically handled all of Fannie Mae’s securitization work. Basically, that means FNMA takes all of its mortgages, bundles them into a grantor trust and then sells off interests in the trust based upon what particular investors were looking for. It gets complicated, but basically, they could strip certain characteristics from the securities to better suit what certain investors wanted, and thus able to sell them at a better price than the mortgage taken as a whole. An analogy would be if you had 10 pigs. A certain buyer may really want just chops. Another may want mostly bacon. If all of them are forced to buy a whole pig to get the part they want, they will pay less than if you just take the chops from all the pigs and separate them from the bacon and sell each butcher just what it wants. Same thing with bundled mortgages, except investors were interested in prepayment rates or default rates or interest rate changes rather than bacon vs. chops.
So…one of the most important aspects of these securities is the tax treatment the securities will receive, ie. , will they be considered debt for tax purposes or are they considered equity.
To be considered debt, a security has to have a much higher level of security than equity. Think about in terms of bankrupcy, the first people to be paid (after the lawyers and IRS) are debt holders. The very last are common stock holders.
So, to be able to issue an opinion that these securities should be considered debt, we had to have a certain level of comfort that, no matter what, the buyers of these securities would get their money back. This was accomplished through spreadsheets that basically predicted the amount of prepays on the mortgages and the amount of defaults, both of which would cut into the profit of the security purchasers.
We would ask for the baseline of what was predicted for both of these and then ask for some multiple of both. When I first started, basically a security had to endure 2 times the predicted prepays and 2 times the predicted defaults before we were comfortable saying that the security could be considered “debt”. By the time I left in 2004, more and more bundles were not making that number and I was told that “no one was asking” for such aggressive multiples and that they did not understand why we would not just take the baselines.
And…to an extent my firm went along. I think we finally insisted on a bare minimum of 1.5 times.
Sorry, that was a bit long winded, but it never really occurred to me what a harbinger all that was.
Rush got it right today when he said the Dems involved in this know that they’re culpable, not one of them has called for a committee hearing.
Nice…sad, but well-crafted.
As a point of clarification…
I was like a 2nd or 3rd year attorney. Ultimately none of the decisions were mine. I just ran the numbers and wrote the opinion letters for the partner.
I know there are Congressmen and players on both sides of the political spectrum that made big bucks on this mess. But the MSM is not going to highlight any connections except the McCain connections. Look at the headlines right now on MSNBC.
Obama, McCain wary about bailout plans | VideoAnger on Main Street rises toward Wall Street |
VideoNYT: Freddie Mac paid McCain aide’s
firmNewsweek: Biden fires up Gaffe-O-Matic
Supreme Court stays Georgia execution
Sadly, the firm probably realized that insisting on the higher multiple would cost them business.
BTW, no one blames you. Please tell me it wasn’t Dakine…