Sometimes it's no fun to be right. Back in January, right after
President Obama announced a new and improved mortgage fraud task
force to bring together the resources of state and federal
agencies investigating mortgage lenders, I expressed doubts that
the task force would get much done. The six months since then
haven't inspired any more confidence. There were early reports
that the Justice Department hadn't even allocated office spaceand telephones to the task force. In May, task force co-chairman
Eric Schneiderman, the New York attorney general, conceded that
the group could use more resources, which is never an
encouraging sign.
On Thursday, three advocacy groups that pushed for the
nationwide $25 billion mortgage settlement -- the Campaign for a
Fair Settlement, the Campaign for America's Future and New
Bottom Line -- said in a call with media that the Justice
Department is to blame for "stonewalling" mortgage fraud
investigations. "Law enforcement people are frustrated and angry
at stonewalling and roadblocks from the Justice Department,"
said Richard Eskow of the Campaign for America's Future. (Eskow
has been even more inflammatory on his blog, asserting in a post
this week that the DOJ "has a long-standing pattern of
inactivity, obfuscation, and obstruction" in banking fraud
investigation.)
Brian Kettenring of the Campaign for a Fair Settlement was
more moderate in criticism of the Justice Department but said
he's concerned the department and Attorney General Eric Holder
are not taking the fraud task force seriously. "We believe this
is a management, leadership, and political problem," he said.
Kettenring pointed out that the DOJ had 93 investigators
checking allegations that former major league pitcher Roger
Clemens used performance-enhancing drugs and then lied about it
before Congress. By contrast, Kettenring said, the mortgage
fraud task force has a grand total of about 100 investigators,
not all of them from the DOJ.
In a report issued Thursday, Kettenring's group also
compared the number of mortgage fraud investigators with the
1,000 feds dedicated to the savings and loan crisis in the 1980s
and the 100 investigators deployed in Enron's failure in the
1990s. The S&L investigation resulted in convictions or guilty
pleas from 1,000 top executives, the Campaign for a Fair
Settlement said, and the Enron case netted 23 execs from the
highest ranks of the company. Not one top banking official, on
the other hand, has even been charged in the mortgage fraud
investigation. Kettenring said in Thursday's call that counting
the number of investigators isn't a precise way to monitor the
mortgage fraud task force's progress, but in the absence of
specific information about what the group is investigating,
that's all we've got.
There's not really much news in what the housing groups are
complaining about -- same old nothing from the government -- but
I'm glad they're reminding us to keep asking why the only news
on the mortgage task force is that it still hasn't announced any
indictments or civil charges. The Wall Street Journal had a
great story Wednesday about time running out for the Securities
and Exchange Commission to bring mortgage-related fraud cases
for securities issued in 2007. My Reuters colleague Aruna
Viswanatha has reported that mortgage fraud investigators mayhave more time under the Financial Institutions Reform,
Recovery, and Enforcement Act, a law that dates back to the S&L
crisis and extends the window for civil charges. But especially
considering the mountains of information private litigators havealready amassed in suits against mortgage lenders and MBS
issuers, we just shouldn't have to wait so long.
I left a message with DOJ spokeswoman Adora Andy but didn't
hear back.
(Reporting by Alison Frankel)
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