AP: FBI investigates possible fraud at IndyMac

Breaking news from the AP: "The Associated Press has learned that now-defunct IndyMac Bancorp Inc. is under investigation for possible fraud in connection with home loans made to risky borrowers.

More: "It was not immediately clear how long the FBI's probe of the bank has been ongoing. The investigation is focused on the company, which was taken over last Friday by the FDIC, and not individuals who ran it, according to a law enforcement official who was not authorized to speak publicly about the investigation."

-- Peter Viles

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.

Photo: Employees of Federal Deposit Insurance Corporation leave the IndyMac Federal Bank headquarters in Pasadena on Monday. Credit: Associated Press

Comments

[RichW]

If anybody is surprised, please speak up :)

[TrojanDLA]

Hello investigators, how about also looking into Fremont? I'm pretty certain of the following anecdote: acquaintances who worked at Fremont's residential section said (with great pride I might add) that there was a "backroom" that would "produce" the necessary financial documents for approval by underwriting. I'm not going to go into detail exactly how these documents were produced, but needless to say, regulators would be interested.

I wonder how much it would cost to bring a few of these backroom workers out from hiding? Folks, if the "big boys" like Fremont and IndyMac were acting questionably, how about everybody else?

[E]

Maybe that's why they are clearing low level offenders out of prisons these days.

They'll be full of REIC members within 5 years! Loan officers, Appraisers and Realtors. They'll have lots to talk about, plenty in common and they can pass the time by measuring the square footage of their cells and coming up with really neat-O cell decorating and staging ideas!

At least their kids won't go hungry...as they'll be in nice, warm, caring foster homes!

ShockG...you sure do have a "purdy" mouth.

[Laura]

Several years later the FBI investigates...what a joke.

[Mopar777]

OK, this is the part when the scapegoats are trotted out before the taxpayers that will soon be on the hook for their excesses. The goverment knew full well what was going on on Wall St. back in the days of cowboy lending and chose to look the other way while they ripped off THE WORLD. Now its time for them to show us how *dilligent* they are at making sure that justice is meted out to these *bad guys* who have long since offshored their millions. Maybe a year or two at the local club fed and then back to the yachts and hookers.

[NV]

let there be light !

[Rich]

"The investigation is focused on the company, which was taken over last Friday by the FDIC, and not individuals who ran it"

Preposterous poppycock--either it's a criminal investigation, in which case it must be an investigation of individuals (even a RICO investigation ultimately is about prosecuting individuals) or else it's a civil matter that the FBI has no business continuing to investigate. Sounds like the anonymous source is trying to deflect the reporters from the trail...

[Tombstone Realty]

Heh.

If people think fraud brought down indymac, then they'll feel that the other banks are totally safe.

Nothing to see here, nothing to see, move along.....

[anonymous]

Read the whole AP wire - the FBI is investigating 21 corporations involved in the subprime market. Are they also investigating Bush for our tax dollars bailing out criminal behavior? Or is fraud okay now, too?

[Dan]

From the facts I get three things:
1. We were told for a couple of years about the crap that was going on in the lending business, but nobody would do anything to slow down the increasing prices and new housing starts
2. A certain senator made statements which caused the run on IndyMac. The FDIC was working behind the scenes to help IndyMac recover. The Senator created a run that prevented that.
3. The run is like global warming, a lot of emotional knee jerk reaction about a whole lot of nothing. The Feds are now managing the bank and everyone with UNDER $100,000 like me in the bank continue business as usual as IndyMac Federal Bank. All the customers lined up outside the bank were just acting wacko

[Dan]

I forgot to mention...
The FBI would investigate for the same reason they would investigate a bank robbery. It is FDIC insured, so any crime committed against a federally insured bank is a crime against the government..

[Michael Ferguson]

Actual fraud should always be prosecuted, but I am skeptical, especially when the government's central roll and responsibility for the mortgage meltdown is being overlooked.

First of all, the Fed injected money into the economy to fuel the real estate boom at what were really negative interest rates after adjusting for inflation. Secondly, the government caused mortgagors to misperceive risk by making all the cheap money available, and by guaranteeing that taxpayers would bail everyone out if anything went wrong. These government guarantees dulled the public's sense of responsibility for taking out loans they couldn't pay back. Also, the government made handing out low-income mortgages a regulatory requirement for banks to retain their licenses, the more the better. Not to mention that Fannie May and Freddie Mac, originally agencies of the government, were the government's handmaidens and chief players who packaged and carried out the Administration's policy to provide low interest mortgages to low income earners.

The Administration's social goals were being met -- until the Fed raised interest rates to stop the resulting run-away inflation in the housing market, which caused the crash. I don't know who should go to jail, but I do know who should stay out of the mortgage business, and that's the government.

[pcfriz]

You should have seen what was going on at FirstMagnus Corp. Yeach....a homeless unemployed could come up with all the required docs. I'm just amazed how it could have gone on for so long. Where was the oversight?

[anonymous]

I have no sympathy for Indymac or Mike Perry at all. But, the feds should also investigate why Schumer singled out Indymac and leaked his letter to the OTS to the media, which caused the panic among the Indymac depositors. There were 90 banks on the FDIC and OTS list of banks in danger of failing and Indymac was not even on the list.

[MyLessThanPrimeBeef]

It's good the FBI is hiring now. Anything to keep the economy going.

I wouldn't be surprised if ex-Goldman people are career-changing over to the FBI and are now investigating IndyMac and who knows, maybe former IndyMac workers can go work for the bureau and investigate Goldman?

[Zofomofo]

I hope everyone is awake and paying attention. This and all the recent problems with the war and missing billions, Enron etc etc. are because the people involved are corrupt. If you're against regulation, you are responsible for the situation. It is like leaving your wallet on your car seat with the door unlocked and then whining when it is stolen.
Government is a system whereby we put laws and regulations in place to compensate for the basic fact that humans are greedy.
Further proof that libertarians are way wrong.

[yours truly, Johnny Dollar]

looks too much like a file photo from the last day at Enron.

[Joseph...the real estate guy]

Attn: FBI

Please arrest as many people as possible!!!!!!!!!!

Instead of giving 25 years to one person, give 1 year to 25 people.

(We need to teach a good lesson to all the people who committed this horrendous fraud)

After 17 years in the business, I am losing my business, my home, my cars, everything because of these idiots!

I remember the day I first heard of the 80/20(Sub-prime//No Money Down) in 1997. They were being offered by FIRST FRANKLIN.

I did not believe it at the time. I did a couple of those to people who qualified in Fresno, and Bakersfield in 2004.

[Valentin Ochoa]

The only bad thing in this mess are those souls whom had their savings in one bank and lost their retirement. Now they have to beg the FDIC to get half of their savings back. That is were things are a mess. Enron people won the case but only received 4K back for their loss. Well, at least the FDIC is willing to give these souls half of their money but they have to make a case and show proof of their capital. That is bunch of BS... But, we all know that we are only covered up to 100K by the FDIC no matter how many different accounts you have under the same bank. My thought was if you had multiple accounts not exceeding 100K that each account would be covered under FDIC. If most souls out there thought the same, they were wrong. It is the total of all accounts in the same branch not exceeding 100k that is covered by the FDIC. Older people are the ones I feel sorry for. Older people argued of why the bank did not tell them that different accounts were not okay if their capital was more than 100K. The bank reps now working inder FDIC said "Call this number and set an appointment to plea your case". I was ashamed. But the only person to blame is BUSH in this matter. He let things go out of hand with our economy. Let the house market plumit. Well, the bank is at fault for giving so many home loans to people who did not qualify.