Ted Kaufman, a former U.S. senator and professor at Duke University School of Law, recently penned an opinion piece for the New York Times, lamenting the federal government’s egregious failures in bringing Wall Street to justice following the mortgage meltdown.
Miami foreclosure lawyer Bruce Jacobs has frequently expressed the same stance, holding that most of the government’s supposed commitment to pursue criminal sanctions against Wall Street was just posturing.
Perhaps it began with good intent. In 2009, Congress passed the Fraud Enforcement Recovery Act. At the time, Kaufman was chairman of two oversight hearings on the act, held by the Senate Judiciary Committee. H says the goal was to ensure both the Justice Department and the Federal Bureau of Investigation had ample resources to file criminal charges against individual Wall Street executives who had perpetuated crimes.
But it may have been doomed from the start, as the Justice Department had many years earlier stopped pursuing prosecutions in these cases, and instead focused on “bank compliance programs” and deferred prosecution. The problem with this approach was two-fold. One, it deprived prosecutors of the skill they needed to take these cases to court and win. Secondly, it bolstered confidence in Wall Street that they were untouchable. And in many ways, that assumption has not been misguided.
A recent report by the inspector general indicates that the Justice Department never made mortgage fraud origination or any crisis-related investigation a priority. In fact, many financial crime bureaus chose to focus instead on things like insider-trading. And the FBI officially ranked complex financial crimes as the lowest of six possible criminal threats – with mortgage fraud being the absolute lowest subcategory.
There was never an aggressive or even remotely centralized effort to attack the issue. Part of that was the fault of Congress, Kaufman concedes. There were a number of congressional appropriators whom Kaufman contends not only failed to give FERA the funds it needed, but actually diverted resources from the agency to other priorities.
But what was perhaps most troubling was that meanwhile, the Justice Department was touting the “robust” and “comprehensive” efforts to bring Wall Street executives to justice. It simply wasn’t happening.
Kaufman asserted that had the Justice Department worked to put together a skilled prosecutorial strike force to investigate and handle obvious defendants in these cases, much of this could have been abated.
Another issue is the fact that prosecutors routinely consider the “collateral consequences” of criminal cases brought against financial institutions. But this should never be an issue, Kaufman said, because the prosecution should focus on individuals – not the institution. Individual prosecutions would not have affected any institution’s ability to recover, and it would have been a powerful lesson to those currently holding those positions that they are not above the law.
Unfortunately, that’s a point that has yet to be made.
While Congress should have been more aggressive in its monitoring of these investigations, Kaufman points out that oversight is only effective when the Justice Department is honest about its current situation – and that includes its weaknesses and systematic obstacles. Instead, administrators were far more interested in saving face in the public eye. In the end, this has not proven an effective strategy.
If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Debt Warriors with Bruce Jacobs,” discussing foreclosure topics that matter to YOU.
Lopsided Approach to Wall Street Fraud Undermines the Law, May 8, 2014, By Ted Kaufman, The New York Times
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