The FBI has started to look into the collapse of Fannie Mae (FNM), Freddie Mac (FRE), Lehman, and AIG (AIG). The agency is looking for fraud, the kind that was part of the Enron tragedy.

The G-Men will not find anything beyond the droppings of vanity and a substantial stupidity.

The odds that the four financial institutions that failed were playing with their numbers to improve earnings is remarkably unlikely. The results were already so spectacularly bad that manipulation was unnecessary. The figures were so strong that the CEOs at the companies made tens of millions of dollars and got to ride around in corporate jets. By the time the earnings began to collapse, the causes were so complex that massaging the numbers would have taken an army of actuaries and accountants. Even such a large force of experts would have needed months to unravel the immensely complex mortgage-backed paper.

The chances that there was earnings fraud involved in the demise of any of the four firms is nil. There are no laws on the books that prescribe special punishments for the dimwitted. If there were, the heads of Fannie and Freddie might spend decades locked up.

The cause of one of the great financial disasters in America’s history is now terribly well-known. Sophisticated people created the most powerful and complex instruments even seen. They launched them into the marketplace ill-equipped to understand the consequences of their failure.The investments seemed like a good deal, a very good deal. Created by geniuses, the products were too good to fail.

That is all the FBI will find.

Douglas A. McIntyre

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