FBI To Investigate Sub-prime Lenders
Feb 1st, 2008 @ 5:24 PM by Alden Smith
It had to happen. Following New York attorney general Andrew M. Cuomo’s investigations into Wall Street banks, the FBI is dropping their hat into the ring of investigations into the sub-prime market crisis. We have seen the effects of this firestorm gaining momentum over the past year. Today, the Tokyo stock exchange took a big hit due to it, and many investment banks and lenders have fallen. Last time I checked, it stood at 209 in the industry. Not a good thing…
The Feds are looking into possible accounting fraud, insider trading and other violations in connection with loans made to borrowers with weak credit. I have to think it is kinda like locking the barn door after the horse has been stolen.
I fail to see why this hasn’t been more visible in the markets. It probably has, but the average Joe just isn’t hearing about it, and as profits soared, it was the best thing since sliced bread. Now that banks and investors are tumbling, it is a little late to cry wolf. I have to think, though, that it is better late than never. It really is time for this mess to be looked into.
I am reading about a lot of investors who have lost a ton of money in this market by buying up packaged securities, claiming that they had no idea of how these securities were identified through disclosure. I also read of a law firm on the East Coast that has made a large fortune in a very short time in writing disclosures for these securities, and now are looking at making a ton of money by working in litigation for the investors and firms that lost their money.
The Feds haven’t identified anyone yet, but say the range of investigations include companies across the financial industry, including mortgage lenders, loan brokers and Wall Street banks. You have to figure that there is a scapegoat in there somewhere. We need to keep a close eye on this one.
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