Financial Meltdown: FBI on the case?
Yes, according to this:
The FBI is investigating Fannie Mae, Freddie Mac, Lehman Brothers and AIG – and their executives – as part of a broad look into possible mortgage fraud, sources with knowledge of the investigation told CNN Tuesday.
The sources would not speak on the record because the investigation is ongoing.
FBI spokesman Special Agent Richard Kolko had no comment on that information, but said that 26 firms were currently under investigation as part of the bureau’s mortgage fraud inquiry.
I laughed at Megan McCardle’s reaction ….
Is stupidity a federal offense? And if so, when do they investigate congress?
…but then I remembered this piece, which I came across last night while putting together the Dodd & Shelby posts immediately below:
Lest you think Citigroup is a lone rogue firm, in 2003, 10 Wall Street investment banks settled with the SEC on various charges. They included Goldman Sachs (nyse: GS – news – people ), Morgan Stanley (nyse: MS – news – people ), Lehman Brothers (nyse: LEH – news – people ), Piper Jaffrey (nyse: PJC – news – people ), UBS Warburg, Merrill Lynch (nyse: MER – news – people ) and Credit Suisse First Boston. We don’t have the time or space to get into histories on all these companies.
It should be clear that this pattern of scandals and financial calamities are not caused by really stupid people somehow getting to the highest positions of power in corporate America and then making huge mistakes out of carelessness. This is the structure of the system.
And here’s the kicker…
The fact is that our regulators are subject to political pressure. And politicians get donations from fat cats, who use corporate, private and association donations to influence politicians to go easy on legislation and regulation.
There are few good guys in either party. The Glass-Steagall Act was repealed during the Clinton administration, and that repeal has taken less than a decade to bring the banking system to its knees. The Bush administration has effectively gutted the fraud provisions of Sarbanes-Oxley by having those in charge of enforcing the laws biased in favor of fat cat contributors. A recent article in The Wall Street Journal reported that records show the government has ruled in favor of corporate whistle-blowers a mere 17 times out of 1,273 complaints filed since 2002. An additional 841 cases have been dismissed outright. Is it possible that so few complaints filed under this law had no merit? You tell me.