Attorney General Eric Holder and Justice Department Criminal Division chief Lanny Breuer testified yesterday before the Financial Crisis Inquiry Commission to outline law enforcement’s commitment to fighting financial fraud.
Although the inquiry has been touted as a way of getting to the bottom of the financial industry practices that led to a severe recession, it so far hasn’t made any breakthrough headlines. Its two days of hearings this week were eclipsed in the news by reports from Haiti, devastated by a major earthquake.
The hearings opened Wednesday with, as the New York Times put it, the “four bankers of the apocalypse” (Lloyd Blankfein of Goldman Sachs, Jamie Dimon of JP Morgan Chase, John Mack of Morgan Stanley, and Brian Moynihan of Bank of America) giving testimony that boiled down to why they weren’t to blame for the collapse of the financial industry.
The regulators and law enforcers came Thursday, and also delivered no surprises. Holder, who rearranged his schedule to appear at the hearing, appeared on a panel with Assistant Attorney General Lanny Breuer, Securities and Exchange Commission Chair Mary Schapiro, and Federal Deposit Insurance Corporation Chair Sheila Bair.
Holder said in his prepared remarks that the FBI is probing 2,800 mortgage fraud cases and he noted that the DOJ recently received more funds to combat economic crimes.
“We will succeed in restoring the integrity of our markets, preserving taxpayers’ resources and protecting the vast majority of hardworking Americans, investors and businesses who play by the rules and adhere to the law,” Holder said.
Breuer added in his prepared remarks that the DOJ “has and will continue to be aggressive, comprehensive and well coordinated.”
But the 10-person bipartisan commission created by Congress to study the causes of the economic crisis raised concerns with how the DOJ handled financial crimes in the past.
Commission Chairman Phil Angelides, a Democrat and former California state treasurer, asked Holder about a 2004 warning from a senior FBI official about “an epidemic of mortgage fraud coursing across this country” and the serious problems it could cause if the DOJ didn’t dealt with it, The Associated Press reported. In 2008, the failure of some of the nations biggest financial firms devastated Wall Street.
The Attorney General said he didn’t know about the warning and would look into it.
“We are constantly in the process of reviewing that which we can do better,” Holder said, according to the AP. “When we find businesses or individuals whose disregard for the law has hurt the pocketbooks of average Americans, we will use every available measure to hold them accountable.”
The commission chairman also asked if moving 500 DOJ investigators from economic crimes to terrorism cases after the Sept. 11 attacks makes it difficult to probe financial fraud, the AP reported.
Holder said he understood why resources were moved to terrorism probes, but he said “fighting white-collar crime is a real priority,” according to the AP.