Investigators are reportedly examining possible fraud by mortgage giants Fannie Mae and Freddie Mac, the failed bank Lehman Brothers and insurer AIG.

Top managers at those firms are also being investigated, the reports say.

In the last year, as the US housing market slumped, the FBI began a broad inquiry across the financial sector.

It was prompted by concerns over the way high risk, "sub-prime" mortgages were being sold.

The FBI has been looking at lenders who sold home loans to buyers on low or unpredictable incomes, and also the investment banks that packaged these loans and sold them on.

Bankruptcy

Investigations into the four companies were at an early stage, officials told the Associated Press news agency.

ABC News, citing unidentified sources, said the probes were assessing whether company officials systematically misled investors about the financial strength of their institutions.

The slump in the US housing market has resulted in billions of dollars of losses for these banks and turmoil in world credit markets.

Freddie Mac, Fannie Mae and AIG are all being bailed out by the US government following bankruptcy fears.

Lehman Brothers, a top investment bank, has filed for bankruptcy protection.

Last week FBI Director Robert Mueller said more than 20 large financial firms were already under investigation.

BBC