FBI investigates sub-prime crisis

[bijou]

Fourteen companies, including some of the world's largest banks, are being investigated over possible accounting fraud, improperly securing loans and insider trading during the sub-prime mortgage scandal.

The FBI said yesterday that it had opened criminal investigations into improper lending in the American housing market.

Neil Power, head of the FBI's economic crimes unit, told journalists that the investigation includes the companies that securitised the loans and investment banks that bought those products, as well as the developers and sub-prime lenders.

"We're looking at the accounting fraud that goes through the securitisation of these loans," said Power.

The FBI did not name the companies it is investigating.

Several of the world's largest banks separately revealed yesterday that they are cooperating with official investigations. Bear Stearns, Goldman Sachs and Morgan Stanley all announced, via official filings to the US Securities and Exchange Commission, that government investigators have asked for information about their sub-prime lending practices.

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