The mortgage crisis and the billions of bailout dollars finding their way into circulation have spawned a surge in fraud cases that already is straining federal law enforcement resources, reports the Los Angeles Times. The FBI is stretched to the limit by 2,300 current investigations—but just 38 are tied to the crisis, and the agency is cherry-picking incidents of people "systematically trying to defraud the system," said one official.
FBI officials told the Senate Judiciary Committee yesterday just 240 agents are looking into mortgage fraud—far fewer than worked S&L cases in the 1980s during that considerably less widespread crisis. The TARP inspector general defended zeroing in on high-profile defendants, saying, "They have the most to lose, they're the most likely to flip, and they make the best examples." (Read more financial crisis stories.)