Sunday, February 15, 2009
Clearly there is a need for increased regulation to stop fraudulent activities. In this past year, there have been too many innocent victims of fraud. The legislative response, however, is disappointing. As I told Chisun Lee at ProPublica, here, it uses a hammer to hit the wrong nail.
Parts of the new legislation are promising. For example, increased funding to monitor and detect fraud would be wonderful. Admittedly Senator Patrick Leahy when introducing the bill notes that "homes mortgages were packaged together and turned into securities that were bought and sold in largely unregulated markets on Wall Street." But the next paragraphs do not logically follow from this statement. That is, adding new federal legislation and increasing penalties are part of the proposed legislation. New laws, however, are not the answer - especially when there were already laws on the books to meet the alleged conduct. What needs to happen here is stopping this misconduct before victims suffer. There needs to be increased regulation and oversight of that regulation to stop those who try to engage in fraudulent activities.
It is interesting to see the National Association of Criminal Defense (NACDL) and Heritage Foundation issuing a joint statement to the Senate Judiciary Committee showing their opposition to the proposed expansion of federal criminal law in S. 386, the Fraud Enforcement Recovery Act.
Heritage-NACDL Letter -Download nacdlheritage_ltr_to_senate_judiciary__fraud_enforcement__recovery_act_s__386.pdf
Addendum - Rita Glavan, Acting Assistant AG- Criminal Division presents the government position here - Download 2009-3057-1.pdf