FBI Begins Fraud Probe of IndyMac Mortgages

Failed bank may have given improper loans to people with bad credit
By John Johnson,  Newser Staff
Posted Jul 16, 2008 7:11 PM CDT
Lillian Krasn, left, and Hanita Horowitz complain about waiting in line outside IndyMac Bank, Tuesday, July 15, 2008, in Encino, Calif.    (AP Photo/Nick Ut)
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(Newser) – The FBI is investigating failed bank IndyMac for possible fraud related to its mortgage-lending business, Bloomberg reports. The agency is looking into whether the bank gave improper loans to people with shaky credit. It is working closely with the FDIC, which seized the bank's assets last week. IndyMac specialized in so-called Alt-A mortgages that did not require people to document their incomes, Bloomberg notes.

It's not clear whether the investigation began before the bank failed, the AP says, or what penalties might be meted out to a now-defunct entity. The FBI provided few details but said it is now investigating 21 investment banks, hedge funds, and mortgage companies related to the subprime crisis, up two from last month.