The Federal Bureau of Investigation (FBI) is questioning US lender Indymac Bancorp, it has been reported.
The bank’s collapse along with that of fellow lender, Fannie Mae, has affected UK markets amid fears of further sub-prime mortgage lending revelations.
CNN reported a source close to the situation said federal investigators were probing the bank, although investigations were set primarily on the company and not individuals, the insider claimed.
The FBI explained it was looking at 21 corporations in the lending crisis. "Given the volatility of today’s sub-prime market, we have seen an increase in sub-prime related complaints," the bureau commented.
US sub-prime lending acted as the pre-cursor to wider banking volatilities. Defaults on mortgages left some banks short on liquidity. This led to investors rushing to make withdrawals, which worsened some lenders’ balances.
The fall-out from the sub-prime lending fiasco was a crunch on credit and lessening commercial property activity.