FBI probes AIG and Lehman as pressure mounts for legal action

Authorities ask whether executives knew about the dire state of firms' finances

Investigators at the FBI are combing documents and emails related to the collapse of Lehman Brothers and AIG and the events leading to the nationalisation of Fannie Mae and Freddie Mac, as they widen the search for executive wrongdoing that may have contributed to the credit crisis.

Political pressure for legal action against the people behind the financial chaos has intensified sharply since the United States government sought $700bn of taxpayer funds to bail out firms that have lost billions of dollars in disastrous mortgage investments.

And the FBI said it had widened an already-sprawling investigation into the crisis. Shareholders in these four groups have been all but wiped out. Lehman Brothers went bankrupt 10 days ago after its clients lost confidence in its financial stability.

The insurance giant AIG had to be handed an $85bn government loan two days later, after suffering enormous losses on bond insurance products of dizzying complexity.

And Fannie Mae and Freddie Mac were put into a US government conservatorship after failing to raise the new capital needed to fund guarantees they had written on almost half of the country's outstanding mortgages.

The FBI has already launched more than 500 prosecutions of players at the sharp end of the mortgage crisis – the mortgage brokers and appraisers who helped foist millions of inappropriate loans on people who could never afford to pay them back. It has 1,400 open investigations. Its four additional cases take to 26 the number of investigations of much larger firms. The FBI is examining whether senior executives knew more about the parlous state of their companies' finances than they let on to the public and to shareholders.

According to leaks, the other large companies under investigation include the collapsed sub-prime mortgage lender New Century Financial and Countrywide Financial, once the country's biggest mortgage lender, led by Angelo Mozilo, who repeatedly sold stock in the months before the company's fortunes deteriorated.

Bob Mintz, the head of securities litigation at the New Jersey law firm McCarter & English, said that the FBI has become much more aggressive in prosecuting corporate fraud since the bankruptcy of the energy giant Enron in 2001 – an event which ruined shareholders and employees and triggered a public outcry about corporate greed.

In June, the FBI charged two Bear Stearns hedge fund managers, Matthew Tannin and Ralph Cioffi, with fraud, alleging they misled their funds' investors by painting a rosy picture of their prospect when internal emails showed they believed their toxic mortgage investments could sink them. The pair deny the allegations, but even their arrest generated headlines and the first pictures of the current crisis of Wall Street executives in handcuffs.

Legal analysts predicted at the time that there would be more such images before the crisis is over.