Congress has passed legislation intended to double the number of FBI mortgage fraud task forces and to close legal loopholes that have prevented federal prosecutors from filing fraud and money laundering charges against many mortgage lenders.
In a 338-52 vote, the House of Representatives this week signed off on Senate Bill 386, the Fraud Enforcement and Recovery Act of 2009. All votes against the bill were cast by Republicans. The Senate passed S 386 April 28 in a 92-4 vote.
The bill will allow the FBI to ramp up investigations of mortgage and financial fraud, providing $75 million for the bureau to hire 190 additional special agents and more than 200 professional staff and forensic analysts. Lawmakers expect the FBI to double the number of mortgage fraud task forces nationwide, from 26 to more than 50.
The U.S. Attorney’s Office will get $50 million to staff the FBI’s mortgage fraud task forces, and $40 million is earmarked for the Department of Justice’s criminal, civil and tax divisions to provide litigation and investigative support in fraud cases.
The U.S. Postal Inspection Service, the U.S. Secret Service, and the Office of Inspector General for the Department of Urban Housing and Development will get $80 million to combat fraud in federal assistance programs and financial institutions.
The bill also updates federal fraud statutes to mortgage lenders not directly regulated or insured by the federal government, who were responsible for nearly half the residential mortgage market before the economic collapse. S 386 amends federal securities law to cover fraud schemes involving commodities futures and options.
The bill is also intended to protect the economic stimulus package and $700 billion Troubled Asset Relief Program (TARP) from fraudulent schemes, by extending fraud statutes to include those programs.
In addition, the bill authorizes the creation of a bipartisan Financial Crisis Inquiry Commission to investigate the causes of the current financial and economic crisis and advise Congress as it considers further reforms.
The 10-member commission, which will hold hearings and be empowered to issue subpoenas for witness testimony or documents, is to report its findings to Congress by Dec. 15, 2010.
Issues to be investigated include fraud and abuse in the financial sector; state and federal regulatory enforcement; credit rating agencies; lending practices and securitization; corporate governance and executive compensation; federal housing policy; derivatives; Fannie Mae and Freddie Mac; and short-selling. The commission will also examine the failures of major financial institutions.
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