FBI Head Expects to Investigate Hedge Funds Chasing Mortgage Fraud
The sub prime mortgage scandal was definitely created in large part by mortgage brokers offering up shady deals, but they could not have acted in a vacuum. Someone had to underwrite those mortgages and securitize the portfolio, reselling it to investors via hedge funds. Well, FBI Director Robert Mueller and the FBI is still in the process of following the money working to trace the fraud back to the money that created that demand and enabled it to happen by not operating in a truly free market fashion.
“We are targeting accounting fraud, insider trading and deceptive sales practices. These investigations may well lead to other instances of fraud, from investment banks and private equity firms to hedge funds.” Subprime probe may lead to hedge funds, others: FBI
Mortgage fraud was possible in part because the people that should have been reviewing the mortgage brokers actions and the banks above them both turned a blind eye to what was really going on. In the drug world, this is part of the reason why the FDA is in place to test drugs, such as was done with lipovox reviews, and now many politicians including the Fed are lining up to set up controls that would do the same in the mortgage market.
