Analysis: New Team To Probe Mortgage, Banking Fraud
The president has announced a new special investigations unit to dig into fraud and wrongdoing in the mortgage and banking system in the run-up to the financial crisis and housing market collapse:
"Tonight, I am asking my Attorney General to create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. 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."
Consumer groups are applauding this move. Move On Executive Director Justin Ruben immediately released a statement in the language of the "Occupy" movement, saying:
"This is a huge deal for the American people and the biggest victory yet for the 99%. By launching this investigation, President Obama will take a crucial step towards holding the 1% on Wall Street accountable for the big bank fraud that nearly torpedoed the economy."
The back story here is that these groups have been pushing for this move by the president in the face of an expected settlement between the major Wall Street banks and dozens of states' attorneys general.
The consumer groups, along with some economists, don't want to see the states give up their right to prosecute Wall Street more aggressively. They worry the settlement might absolve mortgage companies, banks and executives of wrongdoing.
Consumer advocate Robert Borosage, with the Campaign for America's Future, said: "It would be like granting amnesty to an alleged bank robber before you really investigated to find out if he robbed the bank and how much money he stole."
Just what this new unit will find through its investigations, and how rigorous those investigations will be, of course remain to be seen.
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