The Federal Bureau of Investigation is reviewing accounting practices across the insurance industry to determine whether it may become “the next big one,” in terms of corporate scandals, an FBI assistant director told the New York Times.
The comments of Chris Swecker, who oversees the FBI's financial crimes unit, came as agents across the country were instructed to look for accounting irregularities similar to ones ensnaring American International Group, which is being investigated by multiple state and federal authorities.
"I'm not going to say it is the next crisis, but I will say we are looking at it,” he told the New York Times.
He also said, “We do not want to be caught napping on this. We are taking a very, very hard look at this to see if it represents a pervasive problem." FBI officials compared the current review to those conducted into the savings and loan crisis in the 1980s and into the recent corporate fraud cases at Enron and other large companies.
One skeptic was Robert Hartwig, chief economist for a trade consortium called the Insurance Information Institute, based in New York. He said any comparisons the FBI may be making to the savings and loan crisis or Enron-like scandals were misguided.
"They will find, I'm confident, that there are no appropriate analogies here to those types of broad industry problems," Hartwig said. "What we have here are isolated cases of accounting improprieties that have been uncovered."
AIG has revealed that its accounting irregularities would force it to restate earnings, reducing its net worth by $2.7 billion.
AIG spokesman Chris Winans said of the FBI's latest review, "In general, we welcome any constructive effort aimed at improving the environment of the insurance industry."
"AIG is cooperating with government authorities to the fullest extent possible, and that would include state, federal and regulatory authorities," he added.
AIG is under investigation by the U.S. Securities and Exchange Commission, the Justice Department, the New York State Attorney General's Office and the New York State Insurance Department.