The Obama administration launched a renewed push Tuesday to prosecute financial crimes and stop financial fraud.
Updating a seven-year-old, post-Enron task force first formed under former President George W. Bush, this new effort will go after financial crimes relating to the current crisis and recovery efforts. The task force is a collection of some 20-odd federal agencies and departments like the Department of Justice, Treasury, the Securities and Exchange Commission, and the Federal Reserve, among others.
The goal is to bring them together in hopes of greater cooperation and better overall performance.
One change from the Enron-inspired effort will be a focus on problems that are "more systemic," according to a Justice Department spokesperson. The collective will go after "bigger picture, interlocking issues."
The new effort is bringing together bank regulators, for example, with criminal prosecutors: the regulators know things that the prosecutors don't. Lending fraud is easier to catch when you're familiar with banking and lending issues. So there will be a lot of information sharing and training to help prosecutors get up to speed.
"We face unprecedented challenges in responding to the financial crisis that has gripped our economy for the past year. Mortgage, securities, and corporate fraud schemes have eroded the public's confidence in the nation's financial markets and have led to a growing sentiment that Wall Street does not play by the same rules as Main Street," said Attorney General Eric Holder.
Holder said the FBI is already investigating more than 2,400 mortgage fraud cases, up almost 400 percent from five years ago. The agency has more than doubled the number of agents investigating mortgage scams, he said.
Treasury Secretary Timothy Geithner added that the Treasury Department has been investigating home loan modification scams for months. In fact, a recent report by MortgageDaily.com shows that federal and state regulators are increasingly going after loan mod scammers with aggressive lawsuits.
This updated task force particularly will focus on:
*Mortgage fraud -- from the simplest of "flip" schemes to systematic lending fraud in the nationwide housing market;
*Securities fraud -- including traditional insider trading, Ponzi schemes, and misrepresentations to investors;
*Recovery Act and rescue fraud -- we will ensure that the taxpayers' investment in America's economic recovery is not siphoned away by a dishonest few; and,
*Discrimination -- this Task Force will work to ensure that the financial markets work for all Americans, and that no one is unfairly targeted based on impermissible characteristics.
"Too often in the past, even with dedicated people at the federal and state level trying to provide strong protections, resources around enforcement were not mobilized until extensive damage had already been done," Geithner said today. "Remember, it took federal banking agencies until June 2007 to reach a consensus on supervisory guidance that imposed even general standards on subprime mortgages. By then it was too late."