Bill Adds White Collar Resources
Washington-Congress has passed landmark legislation that increases the resources of the Federal Bureau of Investigation and other law enforcement agencies to pursue mortgage fraud and white-collar crimes.
Among other things, the bill (S. 386) makes it a crime for loan brokers and mortgage bankers to make materially false statements or willfully overvalue properties to influence any action by a mortgage lending business. (S. 386 expands the federal bank fraud and false claims statutes to cover non-depository lenders and loan brokers for the first time.)
At a White Housing signing ceremony, President Obama said the legislation addresses the "twin scourges of mortgage fraud and predatory lending" by updating federal laws.
"It expands the Department of Justice's authority to prosecute fraud that takes place in many of the private institutions not covered under current federal bank fraud criminal statutes, institutions where more than half of all subprime mortgages came from as recently as four years ago," the president said.
S. 386 provides $245 million in new funding over the next two years allowing the FBI and other agencies to hire 300 federal agents, 200 prosecutors along with 200 forensic experts and support staff.
Senate Judiciary Committee chairman Patrick Leahy, D-Vt., said the bill will "rebuild" the nation's fraud enforcement capacity and double the number of FBI agents working financial fraud cases.
Sen. Leahy, the original sponsor of the legislation, noted that the FBI today has fewer than 250 special agents assigned to financial fraud cases, which is only a quarter of the agents the FBI had at the time of the savings and loan crisis.
Mortgage Bankers Association president and chief executive John Courson said the bill will lead to a "crackdown" on mortgage fraud scams, including foreclosure rescue fraud, "which is imperative to protecting vulnerable consumers as well as protecting the integrity of our housing finance system."
The president's signing of the bill also authorizes the Justice Department to pursue fraudulent activities involving the Troubled Asset Relief Program. Congress has provided the Treasury Department with $700 billion in TARP funds to capitalize banks and deal with problem assets.
The law also sets in motion the creation of an independent commission appointed by Congress to investigate the causes of the financial crisis.
This bipartisan Financial Crisis Inquiry Commission will "investigate the financial practices that brought us to this point, so that we make sure it never happens again," the president said.