FBI Investigates IndyMac

The FBI is investigating the recently defunct IndyMac Bancorp Inc for fraud after the company provided loans to risky borrowers, the Associated Press is reporting.

The Company taken over by the Federal Deposit Insurance Corporation (FDIC) last Friday has been under FBI investigation for some time now, though the time span of the ongoing FBI probe is not yet clear. The FBI fraud probe will target the company and not the people who ran IndyMac, a law enforcement official told the AP.

The Office of Thrift Supervision transferred IndyMac's operations to the FDIC last Friday because it did not think IndyMac could secure it depositor's money. Federal regulators seized IndyMac's assets after it succumbed to "the pressures of tighter credit, tumbling home prices and rising foreclosures," the AP reports. Once the FDIC took over it gave most depositors immediate access to $100,000 in their savings and checkings accounts and 50 percent of any amount in excess of $100,000. Those who had joint or retirement accounts could withdraw larger sums, however.

The FBI's probe into financial institutions is nothing new in the struggling US economy. The ongoing fraud investigation into operations at IndyMac is just one of the many FBI investigations launched since the start of the year. The FBI is currently investigating 21 companies allegedly involved in the subprime mortgage crisis, at least 1,400 mortgage fraud cases across the US and more than 400 persons from the real estate industry have been indicted since March.

To date, IndyMac is the largest regulated thrift to fail and the second largest financial institution in US history to close.