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CNN: FBI investigating IndyMac for fraud

Toe Jam

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WASHINGTON (CNN) -- The FBI is investigating Indymac Bancorp for fraud, a source tells CNN.

The California-based bank was taken over by federal regulators last week. Indymac's collapse was the second-largest bank failure in U.S. history.

A source said the federal government is looking into whether the bank engaged in fraud when it made home loans to high-risk borrowers.

The source said the investigation is focused primarily on the company, not individuals.

In a written statement, the FBI didn't specifically comment on Indymac but noted that it is investigating 21 corporations in the subprime lending market for possible mortgage fraud.

"We receive information from a variety of sources on a daily basis, and we have an obligation to review each allegation on its own merits," the statement said. "Given the volatility of today's subprime market, we have seen an increase in subprime related complaints."

The statement said that in order to protect the integrity of its investigations, the bureau does not comment about or confirm specific companies that may be under scrutiny.

Friday's closure of IndyMac bank sparked investor panic that sent shares of mortgage finance giants Fannie Mae and Freddie Mac on a wild ride and fueled speculation of a government rescue.

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