Jan. 29 (Bloomberg) -- The Federal Bureau of Investigation is investigating 14 corporations for possible accounting fraud and other crimes related to the subprime lending crisis, officials said.
Neil Power, chief of the FBI's economic crimes unit, wouldn't identify the companies, though he said the cases involve ``valuation-type stuff.'' The probes include reviews of subprime lenders, housing developers and Wall Street firms that package loans as securities, he said.
``We're looking at the accounting fraud that goes through the securitization of these loans,'' Power said at a briefing with reporters in Washington today. ``We're dealing with the people who securitize them and then the people who hold them, such as the investment banks.''
The probes add to federal and state scrutiny of the home- loan industry as prosecutors and regulators seek to assign culpability for the mortgage rout that has forced people from their homes and resulted in losses to investors. The biggest banks and securities firms have posted at least $133 billion in credit losses and write downs related to the loans, which are typically made to buyers with the weakest credit.
Separately today, Goldman Sachs Group Inc., Morgan Stanley and Bear Stearns Cos. said in corporate filings that they are complying with regulatory requests concerning investment products linked to home loans. The companies didn't specify which agencies asked for the information.
Civil Cases
The Securities and Exchange Commission, which brings civil cases, has about three dozen inquiries open, the agency's deputy enforcement director said earlier this month.
The FBI works ``hand-in-hand'' with the SEC, Power said today.
On subprime lenders, Power said the bureau has been ``looking over their books and of course there are some irregularities there that we're looking into.''
Power said another area of criminal inquiry is insider trading -- whether executives sold shares when they knew loan defaults were going to surge.
The FBI also investigates other mortgage-fraud crimes, most centering on individuals such as brokers, appraisers, Realtors, developers or straw buyers who illegally obtain loans.
The bureau has 1,210 pending mortgage-fraud cases, officials said.
Well just the word subprime is overused, so much that now it's the Boogy Man. Now people are scared of it. Can you see
why? Whenever you have a lender that tells you stuff like "Off the record I will
approve the loan if restructure it like this..." Bye Bye credibility
-Christopher Rockey
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