Thursday, January 26, 2012
In his State of the Union Address, President Obama announced that he would create a financial crimes unit to crack down on fraud:
We’ll also establish a Financial Crimes Unit of highly trained investigators to crack down on large-scale fraud and protect people’s investments.
This surprised me because I thought that's what the DOJ and the SEC were supposed to do, and, according to their officials, are doing.
President Obama also announced a state-federal coalition to deal with mortgage fraud:
And tonight, I’m asking my Attorney General to create a special unit of federal prosecutors and leading state attorney general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. (Applause.)
This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans.
Again, one can question why an aggressive investigation on either the state or federal level has not taken place before. Nevertheless, more information is emerging about this state-federal investigation, which apparently will be led by New York State AG Eric Schneiderman. After the State of the Union Address, AG Schneiderman released the following statement:
"I would like to thank President Obama for his leadership in the creation of a coordinated investigation that marshals state and federal resources to bring justice for the victims of the misconduct that caused the mortgage crisis.
"In coordination with our federal partners, our office will continue its steadfast commitment to holding those responsible for the economic crisis accountable, providing meaningful relief for homeowners commensurate with the scale of the misconduct, and getting our economy moving again.
"The American people deserve a robust and comprehensive investigation into the global financial meltdown to ensure nothing like it ever happens again, and today's announcement is a major step in the right direction."
Bloomberg reports that the mortgage investigation unit will focus on bank conduct that caused the housing bubble and bust, including the securitization of loans. The unit will include DOJ, SEC and IRS officials and will be part of a task force created in 2009 to investigate and prosecute financial fraud cases. Bloomberg, Obama Creates Unit to Probe Mortgage Misconduct by Banks