WASHINGTON - The FBI is investigating failed bank IndyMac Bancorp Inc. for possible fraud, an official said yesterday of the government's latest target following the collapse of the nation's subprime mortgage market.
It was not immediately clear how long the FBI's probe of the bank has been ongoing - or whether it was opened before last Friday's takeover of IndyMac by the Federal Deposit Insurance Corp.
The investigation appears to be is focused on the company and not individuals who ran it, a law enforcement official said. The official spoke on the condition of anonymity because he was not authorized to speak publicly about the investigation.
IndyMac Bank's assets were seized by federal regulators after the mortgage lender succumbed to the pressures of tighter credit, tumbling home prices, and rising foreclosures. The bank is the largest regulated thrift to fail in the last 20 years, regulators said.
Reports of mortgage fraud have soared over the past year as the subprime mortgage market collapsed, and defaults and foreclosures soared.
It's unclear what penalties IndyMac could face now that it has been taken over by the FDIC. Generally, companies guilty of illegal activity can face civil charges and be forced to pay sanctions. In some cases, investigations that uncover new information can lead to new targets - like individuals.
Over the past year, the FBI has opened a wide-ranging probe of financial services companies, from mortgage lenders to investment banks that bundle home loans into securities sold to investors. Countrywide Financial Corp is also under scrutiny.
Additionally, two former Bear Stearns managers were indicted last month on conspiracy and securities and wire fraud charges alleging they lied to investors in a hedge fund that tanked last year as the subprime market collapsed. Those charges marked the first criminal charges to arise on Wall Street from the subprime mortgage debacle.
In all, the FBI is now investigating 21 companies tied to the subprime mortgage crisis. Authorities are looking into at least 1,400 mortgage fraud cases nationwide.