Evidence of fraud and deception in the home mortgage business was presented to the FBI, the Securities and Exchange Commission and the Federal Reserve during the last five years, but resulted in no coordinated federal reaction, law enforcement, civil rights activists and states' attorneys general told ABC News.
"The failure to connect the dots is completely reprehensible and should now lead to strong and effective indictments and prosecutions for fraud," Connecticut Attorney General Richard Blumenthal told ABC News.
Federal Reserve Chairman Ben Bernanke didn't express much interest when he met with a coalition of civil rights groups who shared concerns that minority homeowners were hard hit by predatory lenders, Wade Henderson, president of the Leadership Conference on Civil Rights, told ABC News.
Lawmakers involved in fraud cases against the mortgage brokers affiliated with now-bankrupt Lehman Brothers also said the FBI showed similar disinterest, ABC reported.
The SEC bears most of the blame, Blumenthal said, because it has direct oversight over investments brokers such as Lehman Brothers.
"The signs were there, there were clear red flag warnings, but they failed to take action to stop the sales of these flawed investment instruments to public in general," said Blumenthal.