Report: FBI saw mortgage crisis coming in '04

An FBI official recognized the gathering mortgage crisis as far back as 2004, and predicted confidently that the FBI could prevent the problem from growing as costly as the S&L crisis, the Los Angeles Times reports Monday.

From The Times: "Long before the mortgage crisis began rocking Main Street and Wall Street, a top FBI official made a chilling, if little-noticed, prediction: The booming mortgage business, fueled by low interest rates and soaring home values, was starting to attract shady operators and billions in losses were possible.

More: "'It has the potential to be an epidemic,' Chris Swecker, the FBI official in charge of criminal investigations, told reporters in September 2004. But, he added reassuringly, the FBI was on the case. 'We think we can prevent a problem that could have as much impact as the S&L crisis,' he said.

The Times report, by  Richard B. Schmitt, calls the FBI's response to the mortgage crisis "tepid," pointing out that roughly half of the FBI's mortgage fraud investigations involve losses of less than $1 million. Schmitt also reports that in 2007, when the mortgage implosion was front-page news, the number of FBI agents assigned to investigating mortgage fraud "shrank to around 100. By comparison, the FBI had about 1,000 agents deployed on banking fraud during the S&L bust of the 1980s and '90s, said Anthony Adamski, who oversaw financial crime investigations for the FBI at the time."

-- Peter Viles
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Photo: FBI Director Robert Mueller; Credit: Getty Images.

Comments

[Laker]

Where have they been all this time?
since 2004...it is four years after....
They have 100 agents to take care of this while having 1000 that took care of stuff with the S&L crisis.
We all know that this crisis is way more than the S&L so there is a need of at least couple of thousand agents to take care of business...
We are in such a denial...that it is not funny.

[LA-renter]

"Officials said they began approaching mortgage companies and others in an attempt to raise awareness about the growing fraud problem. But the lenders had little incentive to cooperate because they were continuing to make money...

Black says that in many cases, THEY WERE PART OF THE FRAUD."

Finally, we have Federal officials speaking truth!

Also, thank you Washington for the "War on Terrorism"!.. I posit (without proof) that more Americans will commit suicide in order to resolve debt problems than will be killed by terrorists.

[sheila]

hey, this reminds me of how the states tried to regulate/prosecute these types of mortgage fraud early on, and the Bush admin EXPRESSLY FORBID THEM, then refused to regulate or prosecute, despite repeated demands from ALL 50 STATES' Attorneys General:

http://tinyurl.com/2vk7gf

is there ANY process in the past 7 years that these mercenaries didn't promote fraud, corruption and incompetence in?

here's their formula: weaken oversight + ignore infrastructure + ignore warnings + politically pack all agencies/departments + rattle saber + preempt every other govt. body + enable Robber Barons - all middle and lower income people - science - checks and balances - overseas allies - troops = Win For Haves and Have Mores.

wow, whatever happened to one man = one vote, the 10th Amendment, the rest of the constitution, and 3 co-equal branches of government? i mean, Schoolhouse Rock even put them into cartoons so simpletons could understand...

heck of a job, once again. heck of a job.

[Kathy]

It's nothing short of ironic that the FBI had more agents working on "terrorism" since their poor management oversight led to the dismissal of the now infamous "Phoenix memo" written by one of the agents who fingered some of the 9/11 hijackers taking flight school lessons in Arizona as highly suspicious. Way to be proactive, FBI.

[Lou]

I'm not impressed that the FBI saw this coming back in 2004. Why? Because a child with developmental disorders could have figured out these subprime loans were all junk. Giving a 2 year adjustable mortgage to a person who states what their job and income is is moronic. Too bad the politicians and mainstream media aren't as smart as a child.

[mlimberg]

Like our Governemnt didn't know this was coming.... they changed the bankruptcy laws back in August 04 so that you really could not have everything discharged... tell me they didn't see this coming... BS... I even saw it coming... and I'm just a rocket scientist....

[The original RZ]

If they did such a good job predicting it, why didn't they actually do something about it? It doesn't matter that they only had 100 agents on it, they still could have accomplished something to prevent the mess that is going on, rather than now just telling us that they knew about it 4 years ago.

They should have also investigated the inflated appraisals that helped make houses so ridiculously expensive.

[Maggie Knowles]

Yes, I remember reading the FBI website about the fraud problem in the housing market, but I probably didn't start reading about it until 2005/2006. It was obvious to anyone whose eyes were open what was going on. Do you think this might have something to do with the policies of our federal government, the fact that nothing was done about it? This is not just a housing market problem either.

I saw Bush talking to a reporter while in China and he said that he didn't agree that Americans had any problems.

That's why I'm voting for Obama/Biden. Obama has real leadership and problem solving skills. We have very serious problems like fraud in the housing market (and Wall St.), etc. and we need to come up with real solutions. We are a great country, I know that we can rebuild our country, pay off our debt, build a savings, and pass on to our kids a better world than we had. Or at least a better future. We've got to get rid of this ongoing corruption. This is a very important election, we have a chance to clean house and start fresh. I hope we do.

[Barbara Ann Jackson]

Congress needs to investigate and property owners need to be WARNED about mortgage lenders’ filing falsified IRS tax form 1099-A's or 1099-C's –especially for FORECLOSURES. To illustrate, here is a portion of my statement concerning Wells Fargo's false 1099-A, as well as a link to entire actual statement posted at:
http://www.lawgrace.org/2008/08/08/my-august-8-2008
-statement-to-the-louisiana-secretary-of-state-office-of-
financial-institutions-concerning-wells-fargo-irs-and-
mortgage-frauds-sham-foreclosures-and-judicial-
collusion-and-national-app/
======================================
This Financial Office mistakenly thought a complaint was filed concerning my property; and on July 30, 2008, Ms. Kathy Drzewiecki responded on Wells Fargo's behalf. . . .As your records show, GE Capital Mortgage Services, Inc., became defunct in year 2002 when it merged into GE Mortgage Services, LLC, its "successor." Therefore, it is impossible for foreclosure auction to have LAWFULLY been carried out in year 2005 on behalf of the non-existent GE Capital Mortgage Services, Inc. Also, contrary to what Ms. Drzwiecki wrote, it is NOT POSSIBLE in year 2005 for Wells Fargo to continue being the "mortgage servicer" for non-existent GE Capital Mortgage Services. Furthermore, if my property was (impossibly) ACQUIRED by GE Capital on May 19, 2005, there is NO LAWFUL REASON for the IRS form 1099-A to exhibit Wells Fargo's name!

Another thing Ms. Drzewiecki's letter failed to state is that I initially acquired my residence property in 1993 through AmSouth Bank. For home improvement in 1999, I refinanced it with GE Capital. I had equity in the property, and I never had a subprime loan. (Marriage failure caused me financial ruin; and crooked deals in Family Court sealed my fate.)
On the other hand, facts overwhelmingly demonstrate that, using defunct GE Capital's identity, debt collector attorney Herschel C. Adcock, Jr., fraudulently seized and acquired more than $80,000 when he flipped my property. Also, contrary to the form 1099-A, the Fair Market Value was not $12,000 -as manifest from the year 2005 sale price for which that property was sold in that same tax year purportedly to a third party.

A lot of foreclosed former property owners will one day discover there is a 1099-A or a 1099-C for which the IRS wants answers. If that 1099 is replete with false information, there could be severe tax effects and a lot of needless untangling to be burdened with.

Across the country, foreclosures have been halted because "real party interest" was absent from those foreclosure proceedings. Yet (in Louisiana), it would not be farfetched for foreclosures to become filed in the name of 'Mary had a little lamb', and judges allow peoples' homes to become seized.