FBI Probing IndyMac, Report Says - TheStreet

FBI Probing IndyMac, Report Says

The Associated Press says the investigation is on possible fraud in loans made to risky borrowers.
Author:
Publish date:

The Federal Bureau of Investigation is probing the now-defunct

IndyMac Bancorp

for possible fraud in connection to loans made to risky borrowers, the

Associated Press

reported.

IndyMac, which specialized in so-called Alt-A loans, was

seized

by federal authorities Friday night after a run on the bank left it illiquid and its stock in ruins. It was the second largest failure of a financial institution in U.S. history, the Office for Thrift Supervision said.

It is unclear how long the FBI investigation has been going on,

AP

reported. The probe focuses on the company and not the people that run it, the wire service said, citing a law enforcement official unauthorized to comment on the matter.

Alt-A loans are made to more credit-worthy borrowers than subprime loans, but often require less documentation. The Federal Deposit Insurance Corp. is continuing to run the bank under the name IndyMac Federal Bank.

Countrywide Financial

, a former IndyMac competitor acquired earlier this month by

Bank of America

(BAC) - Get Report

, also reportedly has drawn the FBI's scrutiny. The company also is the subject of civil charges from attorneys general in California, Florida and Illinois.

This article was written by a staff member of TheStreet.com.