Law & Order, ECU — FBI Probes Investment Banks With Its Unit

FBI Agent
The FBI will probe banks with its special unit. Photo: iStockphoto

Late yesterday afternoon, the FBI announced it was investigating fourteen banks for accounting fraud relating to subprime-mortgage loans. "There are some irregularities we are looking at," Neil Power, chief of the FBI's Economic Crimes Unit, told ABC News, adding that "good old-fashioned greed," likely played a part in the turmoil in the U.S. housing market, which has led to $135 billion in credit losses since last year. Power declined to say which companies were targets of the investigation but did say that they were "dealing with the people who securitize them and then the people who hold them, such as the investment banks." Coincidentally, Bear Stearns, Goldman Sachs and Morgan Stanley yesterday all separately disclosed that government investigators had asked them for information about their subprime activities. And they might as well add UBS to their list: The Swiss bank, which posted its fourth-quarter results this morning, announced it would be writing off $14 billion, all of it related to subprime mortgages.

FBI Opens Subprime Inquiry [NYT]
Feds Investigate Banks Over Subprime Lending [CNBC]
FBI Wades Into Subprime Mess [ABC News]
UBS Writes Off $14 Billion [NYT]