The inquiries are general in nature, asking for information about borrowers and whether there was anything amiss with loan applications or the loan application process, according to a person familiar with the inquiries to banks. The inquiries have been broad-based and not centered on any specific borrowers. As of now, the inquiries seem to be focused on clients, not the banks themselves.
Several authorities will be empowered to watch how trillions of dollars in federal aid is distributed, including the Government Accountability Office, the nonpartisan congressional watchdog; a separate congressional panel that has yet to form; and an inspector general who is awaiting confirmation by the Senate.
The Justice Department can open investigations on its own or in partnership with those inspectors general or other overseers.
One of the first prosecutions to come out of the massive aid package during the 2008 financial crisis involved Taylor, Bean & Whitaker Mortgage Corp., a loan originator based in Ocala, Florida. Its owner’s $3 billion fraud, involving mostly Freddie Mac loans, was discovered after an Alabama bank the company was using sought a half-billion dollars from the Troubled Asset Relief Program.
At the time, prosecutors called it one of the largest bank-fraud schemes in U.S. history.
--With assistance from Greg Farrell.
This article was provided by Bloomberg News.