FBI saw mortgage fraud early
The FBI was aware for years of "pervasive and growing" fraud in the mortgage industry that eventually contributed to America's financial meltdown, but did not take definitive action to stop it.
"It is clear that we had good intelligence on the mortgage-fraud schemes, the corrupt attorneys, the corrupt appraisers, the insider schemes," said a recently retired, high FBI official. Another retired top FBI official confirmed that such intelligence went back to 2002.
The problem, according to the two FBI retirees and several other current and former bureau colleagues, is that the bureau was stretched so thin that no one noticed when those lenders began packaging bad mortgages into bad securities.
Both retired FBI officials asserted that the Bush administration was thoroughly briefed on the mortgage fraud crisis and its potential to cascade out of control with devastating financial consequences, but made the decision not to give back to the FBI the agents it needed to address the problem. After the terrorist attacks of 2001, about 2,400 agents were reassigned to counterterrorism duties.
But Deputy Director Steve McMillin of the Bush White House's Office of Management and Budget told the P-I last year that even partially restoring the FBI crime-fighting capabilities was not a priority.
"The assumption that how it was pre- 9/11 is how it ought to be for all time is not the correct premise," he said.
The first retired FBI official said: "We made a direct pitch (for more agents) to the OMB even though we weren't supposed to and they said no." Instead, "we were looking at reductions, not additionsÂ…
FBI saw mortgage fraud early
