The Financial Times reports that the FBI is preparing to drop the hammer on the mortgage fraudsters:

The FBI is preparing to arrest hundreds of people across the US as early as next week for offences including encouraging borrowers to falsify income on mortgage applications, misleading home owners about foreclosure rescue programmes, and inflating home appraisals, said two people with knowledge of the operation.

(h/t Calculated Risk)

The Wall Street Journal looks at the deflation threat to a potential economic recovery.

The fears are most pronounced in Europe, where policy makers are under pressure to reduce large budget deficits now, before durable recoveries emerge. A combination of spending cuts and tax increases could weigh on economic growth and feed into deflation, which is a broad decline in consumer prices.

Deflation makes it harder for consumers, businesses and governments to pay off debts.

And, hey everybody: That’s not exactly a walk in the park as it is.

Critics of the short-term government spending (aka stimulus) and quantitative easing have said it’s going to spark inflation. But it’s actually helped stave off deflation:

The Fed is hoping that it has fought inflation to a standstill by pushing interest rates to near zero and pumping more than $1 trillion into the financial system through loans and bond purchases. While all of that money could in theory cause inflation, weak banks and the immense amount of slack in the economy are weighing against that.

— Bear with me for a little in-house news here: Audit Boss Man Dean Starkman picked up a Mirror Award yesterday for his CJR cover story on press failures in the run-up to the crisis.

Thanks to the Mirror folks for not Mangling Power Problem!

And if you haven’t read the piece yet, you can find it here for the low, low cost of $1.99.

While Dean can put the Mirror on the mantel next to his Pulitzer, I’m sure he’ll never be able to top my 1996 EA Sports Campus Cup championship for excellence in Sega-playing at the University of Oklahoma.

Unfortunately, that’s not a joke—I really won that.

But seriously, props to Dean and to our former colleague Megan Garber, who also won a Mirror for “Common Knowledge.”

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.