Report: FBI saw mortgage crisis coming in ’04

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An FBI official recognized the gathering mortgage crisis as far back as 2004, and predicted confidently that the FBI could prevent the problem from growing as costly as the S&L crisis, the Los Angeles Times reports Monday.

From The Times: ‘Long before the mortgage crisis began rocking Main Street and Wall Street, a top FBI official made a chilling, if little-noticed, prediction: The booming mortgage business, fueled by low interest rates and soaring home values, was starting to attract shady operators and billions in losses were possible.

More: ‘’It has the potential to be an epidemic,’ Chris Swecker, the FBI official in charge of criminal investigations, told reporters in September 2004. But, he added reassuringly, the FBI was on the case. ‘We think we can prevent a problem that could have as much impact as the S&L crisis,’ he said.

The Times report, by Richard B. Schmitt, calls the FBI’s response to the mortgage crisis ‘tepid,’ pointing out that roughly half of the FBI’s mortgage fraud investigations involve losses of less than $1 million. Schmitt also reports that in 2007, when the mortgage implosion was front-page news, the number of FBI agents assigned to investigating mortgage fraud ‘shrank to around 100. By comparison, the FBI had about 1,000 agents deployed on banking fraud during the S&L bust of the 1980s and ‘90s, said Anthony Adamski, who oversaw financial crime investigations for the FBI at the time.’

-- Peter Viles
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Photo: FBI Director Robert Mueller; Credit: Getty Images.