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Log inCredit crisis spawns a hunt for culprits
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Credit crisis spawns a hunt for culprits
by Outspoken on Thu Oct 30, 2008 6:15 am
Credit crisis spawns a hunt for culprits
By Peter Grier
The Christian Science Monitor
Washington – The credit crisis is far from over, but Congress already is pressing federal law enforcement to search for and prosecute financial executives who, by breaking the law, may have helped cause the global money meltdown.
During recent congressional hearings, lawmakers have peppered officials with requests to hold the guilty accountable. And the feds are responding: The Securities and Exchange Commission already has under way more than 50 investigations into the subprime mortgage market. The Federal Bureau of Investigation has 42 ongoing mortgage-fraud task forces.
But actually locking up former Wall Street Masters of the Universe may be difficult. It's not illegal to bankrupt your company by making bad business bets.
And the legitimate search for fraud shouldn't distract from the larger causes of today's problems, which include many Americans living beyond their means, according to one financial expert.
"It is tempting in mid- catastrophe to point fingers at a few malefactors.... But the breakdown of financial markets had many causes, of which malfeasance and even regulatory failure played a relatively small role," said Alice Rivlin, the founding director of the Congressional Budget Office, at an Oct. 21 hearing of the House Committee on Financial Services.
At the present, it appears the Department of Justice does not have a central effort to coordinate investigations related to problems caused by toxic mortgage-backed loans.
But individual US attorneys are proceeding on their own. Jeffrey Sullivan, the US attorney for the Western District of Washington, announced on Oct. 15 a probe into the September collapse of the Seattle-based Washington Mutual. US attorneys in two New York boroughs and in New Jersey are all looking at possible criminal executive actions at Lehman Brothers prior to its bankruptcy.
Credit default swaps, a previously obscure and unregulated corner of the financial futures market, have also drawn federal interest. And House Republicans on Oct. 20 sent Attorney General Michael Mukasey a letter asking him to review the actions of government-sponsored entities Fannie Mae and Freddie Mac as part of any investigation of fraud in mortgage markets.
The FBI is looking at about two dozen large financial firms, including Fannie and Freddie, Lehman, and troubled insurer AIG, on a wide range of charges. About 177 agents are assigned to the effort, according to officials.
http://news.yahoo.com/s/csm/20081029/ts_csm/aprosecute
By Peter Grier
The Christian Science Monitor
Washington – The credit crisis is far from over, but Congress already is pressing federal law enforcement to search for and prosecute financial executives who, by breaking the law, may have helped cause the global money meltdown.
During recent congressional hearings, lawmakers have peppered officials with requests to hold the guilty accountable. And the feds are responding: The Securities and Exchange Commission already has under way more than 50 investigations into the subprime mortgage market. The Federal Bureau of Investigation has 42 ongoing mortgage-fraud task forces.
But actually locking up former Wall Street Masters of the Universe may be difficult. It's not illegal to bankrupt your company by making bad business bets.
And the legitimate search for fraud shouldn't distract from the larger causes of today's problems, which include many Americans living beyond their means, according to one financial expert.
"It is tempting in mid- catastrophe to point fingers at a few malefactors.... But the breakdown of financial markets had many causes, of which malfeasance and even regulatory failure played a relatively small role," said Alice Rivlin, the founding director of the Congressional Budget Office, at an Oct. 21 hearing of the House Committee on Financial Services.
At the present, it appears the Department of Justice does not have a central effort to coordinate investigations related to problems caused by toxic mortgage-backed loans.
But individual US attorneys are proceeding on their own. Jeffrey Sullivan, the US attorney for the Western District of Washington, announced on Oct. 15 a probe into the September collapse of the Seattle-based Washington Mutual. US attorneys in two New York boroughs and in New Jersey are all looking at possible criminal executive actions at Lehman Brothers prior to its bankruptcy.
Credit default swaps, a previously obscure and unregulated corner of the financial futures market, have also drawn federal interest. And House Republicans on Oct. 20 sent Attorney General Michael Mukasey a letter asking him to review the actions of government-sponsored entities Fannie Mae and Freddie Mac as part of any investigation of fraud in mortgage markets.
The FBI is looking at about two dozen large financial firms, including Fannie and Freddie, Lehman, and troubled insurer AIG, on a wide range of charges. About 177 agents are assigned to the effort, according to officials.
http://news.yahoo.com/s/csm/20081029/ts_csm/aprosecute
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