A top FBI official had it right in 2004 when he said that the then-booming mortgage business was starting to attract a not-so-savory element. But as reported by the LAT, both the bureau and the Justice Department were focused on national security and paid little attention to white collar crimes. Besides, the DOJ was so politically motivated in those years that it's hard to believe such inquiries would have been tolerated.

Sources familiar with the FBI budget process, who were not authorized to speak publicly about the growing fraud problem, say that he and other FBI criminal investigators sought additional assistance to take on the mortgage scoundrels. They ended up with fewer resources, rather than more. In 2007, the number of agents pursuing 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.

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"I am happy to have investigations going on, but these investigations should have taken place years ago," said Blair A. Nicholas, a San Diego lawyer representing investors who lost money in the collapse of several subprime mortgage lenders. "They seem to always get involved after the horse has left the barn. It is always cleaning up the mess rather than being proactive." Could the crisis have been averted, or at least mitigated, if the FBI had intervened more forcefully? "Until there is a catastrophic loss, there is no incentive to investigate criminal conduct," said Cynthia Monaco, a former federal prosecutor in New York. "Nor are there people coming forward with evidence" such as angry investors or whistle-blowing corporate employees, she said.