Senior executives at the four major financial firms that recently failed on Wall Street - Fannie Mae, Freddie Mac, American International Group (AIG) and Lehman Brothers - may have thought their troubles were coming to an end after one filed for bankruptcy (See:Lehman Brothers heads for Chapter 11 as Barclays walks away)  while the others got government protection (See: $85-billion bailout for AIG)

However, with the news that the Federal Bureau of Investigation (FBI) has started preliminary enquiries in their operations, some heads can be expected to roll.

They are among 26 companies being scrutinised by the FBI. Freddie Mac, Fannie Mae and AIG were bailed out by the government in the last fortnight, while Lehman Brothers filed for bankruptcy. Senior executives at the companies are believed to be in the FBI's sights, while the Securities and Exchange Commission (SEC) is also reportedly assessing possible civil fraud claims against the four firms. (See: Government bail-out for US mortgage giants Fanny Mae and Freddy Mac)

"The FBI continues to investigate a number of companies for sub-prime lending practices, but the department brings criminal prosecutions based solely on the facts and the law," Brian Roehrkasse, a US Justice Department spokesman, said. "Where we find evidence of criminal wrongdoing, we will prosecute."

"The director and others have confirmed the number of investigations that we currently have, but we haven't named any of the companies," said FBI spokesman Richard Kolko. "The director last week indicated that there are 26 corporate fraud investigations involving the sub-prime industry.''

FBI Director Robert Mueller said last week the bureau was probing 26 financial institutions, but gave no details other than to describe them as "large corporations" that may face allegations of misstated assets. The probe aims to determine whether company executives had any responsibility for the institutions' financial woes through "misinformation or material misinformation'', it was reported.

The investigations come as the US Congress considers a $700 billion bailout package for the financial industry. The Bush administration's plan would allow the Treasury to buy toxic bad debts from troubled financial institutions. Congressmen yesterday demanded safeguards, additional details and more time to scrutinize the way in which the Treasury intends to spend the money. (See: Bush administration announces $500-billion bailout package)