FBI Mortgage Fraud Investigation – Too Little Too Late? Is This Smoke and Mirrors or the Real Thing?

For some time I have been writing and speaking about white collar crime, business ethics and the issue of mortgage fraud.  Then we have the issues that have surfaced over the past several weeks culminating with the President’s address tonight.  A major recession (I’d call it a depression) is facing us if we don’t do something now.

Now just may be too late.  Many individuals and firms have either gone under or become the target of a massive FBI investigation into mortgage fraud over the past several years.  But at the heart of this entire mess is the government and their failure to provide oversight and accountability.  It seemed that a robust economy balanced on the back of home ownership was more important than practical long term ethical decisions that fall on the backs of our elected officials.  (And for anyone who feels that I am leaning one way or the other politically – I feel there is plenty of blame for all elected officials).

Now we find in published reports that the FBI is expanding it’s investigation of major institutions whose names have been at the heart of the meltdown we are today witnessing.

According to CNN:

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.

Two officials with knowledge of the FBI investigation into the mortgage crisis said “the investigation is all very preliminary”. They said there is a lot of anger and people want someone held accountable.

Officials are looking into whether any criminal activity occurred, but the Bureau said the investigation will take some time. They said the investigation is in the preliminary stages, and so far it is a broad look at the companies involved.

“From what I’ve seen so far, I really don’t believe we’re going to find widespread fraud,” according to one of the officials. They said they have to go where evidence and facts lead. Just because an investigation has been opened doesn’t mean there will be charges.

Trust me – there will not be charges.  The FBI investigation (done by well meaning people) is just a political smoke screen so that those who want accountability will feel that something is being done.  Frankly, nothing substantive will be done to hold those most accountable for this financial failure responsible.

As reported in my prior blog entries, FBI Director Robert Mueller told Congress that 1,400 individual real estate lenders, brokers and appraisers are now under investigation in addition to two dozen corporations.  What is of most interest is that the focus is on small time fish and a big sea of corruption.

Greenspan told Congress sometime in the recent past that something must be done with Freddie Mac and Fannie Mae or we would face a meltdown and grave financial crisis.  His prediction has come true.  What’s sad is that our politicians from both sides of the isle did not have the fortitude to step up and do the right thing.  Rather, they buried their head in the sand and now find that they are drowning in a sea of financial misfortune.

ENRON’s leaders were held criminally liable for their financial misdeeds.  This collapse makes the ENRON mess pale in comparison.  Yet, since government backed Freddie Mac and Fannie Mae are at the heart of the problem – both backing poor loans and selling them to the market – there will be nothing criminal to come from this.  The government doesn’t have the will or courage to regulate itself – nor the ethical wisdom to do what is right.

Cynical – well not really.  Practical – yes.  This $700 billion dollar plan will in the end cost $3 TRILLION…just wait and see.  Meanwhile, there is a long winter ahead and the chill we will feel won’t just be the weather.

QUESTION:  Do you believe the FBI will find anyone in any major institution recently names held criminally liable?

4 Responses to FBI Mortgage Fraud Investigation – Too Little Too Late? Is This Smoke and Mirrors or the Real Thing?

  1. […] Posted by Article FBI Mortgage Fraud Investigation – Too Little Too Late? Is This Smoke and Mirrors or the Real Thing? "Trust me – there will not be charges. The FBI investigation (done by well meaning people) is […]

  2. LaMontre says:

    No, but I would like to see investigations into neglegence encoded into the bail out legislation. If any of these CEO’s are found to be responsible in any way, they should be fined to help pay back the public for bailing out their sorry asses. I know, it’s a pipe dream, but I would hope someone on the hill would be a hold out for that kind of sensible idea. What the hell happened to ethics??

    I can’t help but think that this is what happens when the 60’s drug culture takes the helm. “DUI ethics”. But the sad fact is, many of these men are far older, and should have had more wisdom and foresight. It is just a sad day in this country, and we are, once again, the laughing stock of the world.

  3. Sandy Frost says:

    What an excellent column. I have been wondering why the Republicans are saying that this is the fault of the Sarbanes-Oxley Act.
    As the FBI has proceeded, do you think that they were getting too close to the top and the President surprised us with this bailout so close to the election? Why else would the original plan have called for no oversight by Paulson?
    The next administration would have wanted the FBI to pursue their investigation no matter where it led.
    In otherwords, is this just a melodrama to prevent those who caused the calamity from going to jail like Ken Lay?
    Thanks,
    Sandy

  4. Tim says:

    Dear Chuck; not enough and too late! FBI does not care about Mortgage Fraud unless it were some dumb consumer who unwittingly committed it because they are not going to lock up the real criminals and LEHMAN AND THEIR CLAN ARE IT! We have been victimized by Lehman and their greedy partners! They forged loan documents after we closed on our loan changing the conventional 30 fixed rate mortgage we agreed to and that was disclosed us to a usurious payment option arm! They screwed up the forgery however and gave us all 4 copies they forged, that is correct, not 1, but 4 first payment letters all with 4 different payment amounts and then took our on time and in advance payments, held them in a suspense account and commenced a fraudulent foreclosure against our home! We provided proof of said mortgage fraud to our local FBI, congressman, senators, regulators etc., with the FBI agent baulking that he knew all about it but that they did not investigate we irrelevant tax paying citizens claims and while, yes, he admitted mortgage fraud had been committed against us, he was not able to do anything about it! We have filed a petition in the Lehman case requesting BAP 363-o protection and will be seeking a lift stay to pursue these greedy sob’s in our local courts but will be citing fraud that is not dischargeable in BK. Our entire government needs to be impeached; they are the problem here! What good are laws when corrupt judges ignore the law and courts allow these judges to operate this way with these corrupt judges trespassing on the law and government fails hold them accountable! When this is all over, we are leaving the US THE GREAT HOME OF GREED, CORPORATE ENSLAVEMENT AND THE MOST CORRUPT GOVERNMENT EVER IN HISTORY!

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