For Immediate Release
September 2, 2008
FBI National Press Office
Letter to the Editor Regarding the Mortgage Crisis
Your 8/25 story on the mortgage crisis ("FBI
saw threat of mortgage crisis," L.A. Times, August
25, 2008) implied that if the FBI had made more arrests
for mortgage fraud, the crisis could have been averted.
To even suggest that is a cry for a lesson in both civics
and basic economics.
The story's premise was built around a 2004 quote from
an FBI official who said he was confident the FBI could
prevent fraud from becoming a massive problem. In context,
Assistant Director Chris Swecker meant he believed the
FBI could stay focused on mortgage fraud to prevent fraud
from becoming the major driver that would cause a collapse
of credit in the housing market. We believe by a good measure,
the Bureau did that.
The FBI's Criminal Division has arrested 1000 suspects
and targeted 180 criminal enterprises since 2004. We targeted
those lenders and buyers involved in multiple frauds or
cases where the profits went to drug crews, gangs or organized
crime. More investigations are ongoing. But the FBI is
a law enforcement and intelligence agency, we are not banking
In the end, most economists have attributed the crisis
to very aggressive lending practices and too little risk
management throughout the financial services industry.
As far as mortgage fraud was concerned, the FBI had the
right intelligence and provided the right warnings to the
industry, but fraud alone does not appear to be the straw
that broke the mortgage camel's back.
In the boom and bust of the mortgage business, to suggest
that making more arrests would have averted the mortgage
crisis is to confuse the root cause with the side-effects.
It is not a fair or realistic assessment.
Criminal Investigative Division
Federal Bureau of Investigation
(As posted on the Los Angeles Times website, August 29,
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