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Bank bosses face day of reckoning

Governments on both sides of the Atlantic are cracking down on the executives of mortgage companies in the aftermath of the credit crunch’s latest developments.

Wall Street giant Lehman Brothers has been forced to close, Merrill Lynch sold and HBOS taken over by Lloyds TSB due to their exposure to mortgage assets.

Now Prime Minister Gordon Brown as well as the FBI are after executives who claim not to have understood the risks they had taken on.

In a speech at the Labour Party conference in Manchester last week, Brown told delegates: “No member of a bank’s board should be able to say they did not understand the risks they were taking and walk away.”

In the US, the FBI is investigating 26 lenders for corporate fraud and providing misinformation to the market.

Robert Mueller, director of the FBI, says: “The allegations would be that there have been misstatements of assets.”

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