Yesterday, the FBI disclosed that it has launched criminal investigations against 17 companies “in the fallout of the subprime mortgage collapse.” Two Justice Department officials have confirmed that Countrywide Financial is one of the companies under investigation.Ya know... Courts might not want to be rushing to judgments in these cases. There is nothing routine about what is going across America in this mortgage crisis. The article discusses some of the problems they see:
While the bureau will not comment on the companies that are under investigation, two Justice Department officials confirmed to ABC News reports in last week's Wall Street Journal that Countrywide Financial is under investigation.
FBI and Justice Department officials declined to comment on any open cases after the recent troubles of investment bank Bear Stearns, which JPMorgan Chase bailed out earlier this week by purchasing the company.
But in an interview with the Reuters news service Tuesday, Neil Power, section chief of the FBI's Economics Crimes Unit, alluded to a possible probe, saying, "Common sense would indicate that we would look at something that big."
It would seem to me that a lack of due diligence on the part of the banks would make them more responsible for any foreclosures on people that should not have had mortgages offered to them in the first place. We expect Joe and Suzy Sixpack to be a little bit ignorant in how these things work and the risks involved but banks should bear a greater responsibility since this is their field of expertise. It seems to me that anyone being foreclosed on in these kind of situations (ARMs, balloon payment mortgages, etc.) should be looked at as somewhat of a victim to a crime.
Also being looked at are hedge funds, like Bear Sterns, and their investments and transactions surrounding all of this. There are some emails that suggest some serious problems in Bear Stern's management. It is also a seemingly ever changing investigation:
Though the list of companies under investigation has grown, one FBI official said the number of firms under investigation is "fluid," as some of them may not pan out, some of them might close and more firms could come under scrutiny as these long-ranging investigations continue.
The FBI Criminal Investigative Division currently has 1,253 mortgage fraud investigations into all types of mortgage fraud and schemes around the country, including illegal property flipping, home equity schemes and check fraud cases.
Currently in the works is some possible relief for those that are suffering under looming foreclosures:
Rep. Barney Frank (D-MA) and Sen. Chris Dodd (D-CT) are introducing legislation “aimed at stabilizing financial markets by helping as many as 2 million homeowners avoid foreclosure.” The separate bills look to give the Federal Housing Administration “a key role in helping to renegotiate distressed mortgages and would provide up to $300 billion in guarantees to new lenders.”Hopefully this is not too little too late and - unlike handing out corporate welfare to the likes of Bank of America, Countrywide and Bear and Sterns - this will offer some real help to the American people that need it.
[update] via C&L, America is becoming a tent city nation:
Why doesn’t our media cover stories like this? They talk about the economy and mortgage crisis, but they aren’t showing the real effects of it. Instead we have to rely upon foreign news to hear about tent cities popping up in America, full of citizens that once owned their own homes.