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The AP is reporting that surprise, surprise, IndyMac Bank is under investigation for loan fraud surrounding their risky lending practices. (Thanks Don!) This really isn’t that shocking. The only shocking part is that the FBI has waited until the bank collapsed to get their act in gear.
While I know the Feds are looking for a scape goat (or at least a cronie to lock up with the orange one) – they say the focus of this investigation is on the institution and not the executives – they may be hard pressed to prove systemic fraud at the lender. Lenders are careful to ensure each loan file is signed by the borrower and complete upon funding. There argument will be a simple but sound one – if there is fraud it is on the borrowers behalf on the loan documents. After all, the borrower signed the docs. With that argument and a half-decent QA process it will be hard to put a clear-cut case of fraud forward.
On the other hand, nothing like a good witch hunt to make the plebes feel like their interests are being looked after.
From the AP (how much of this can I quote? – we’ll keep it short to be safe!):
Now-defunct IndyMac Bancorp Inc. is under investigation by the FBI for possible fraud in connection with home loans made to risky borrowers, The Associated Press has learned.
It was not immediately clear how long the FBI’s probe of the bank has been ongoing.
Last 3 posts by Morgan
- Subprime Bananas - June 28th, 2009
- Roubini: No confidence in government exit strategy - June 24th, 2009
- Goldman bonuses largest in firm's 140-year history - June 21st, 2009
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