The FBI is on the Case!

When I asked yesterday whether or not fines arising from fraud prosecution might contribute to solving financial problems from Main Street's, rather than Wall Street's point of view, my question was not entirely rhetorical. Nevertheless, I did not have high hopes that it would be taken seriously. Well, if I am to believe a report this morning on the BBC NEWS Web site, there is at least one institution (in the Department of Justice, no less) that has decided that fraud investigation is in order:

The FBI has begun an investigation into four major US financial institutions caught up in the current financial crisis, US media say.

Investigators are reportedly examining possible fraud by mortgage giants Fannie Mae and Freddie Mac, the failed bank Lehman Brothers and insurer AIG.

Top managers at those firms are also being investigated, the reports say.

In the past year, as the US housing market slumped, the FBI began a broad inquiry across the financial sector.

It was prompted by concerns over the way high-risk, "sub-prime" mortgages were being sold.

The FBI has been looking at lenders who sold home loans to buyers on low or unpredictable incomes and also the investment banks that packaged these loans and sold them on.

I find that third paragraph particularly important: This is not a case of trying to pin the crime on an institution that is too bankrupt to pay a fine. The FBI is trying to identify specific individuals who perpetrated fraud and presumably benefitted from it (in which case finding out the extent of that benefit will also be relevant). Now, as we know from history, the Oval Office has a track record in trying to muck with FBI investigations; but the fact that we do know this should make it harder for the current occupant to go down a trail that Richard Nixon once blazed. So strike up the Prokofiev (for anyone with radio nostalgia): The FBI is on the case, and let's all hope that they smoke out the bad guys!