By Matt Stoller, the former Senior Policy Advisor to Rep. Alan Grayson and a fellow at the Roosevelt Institute. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller.
Since the President is now establishing yet another committee to look into the mortgage fraud crisis, I figured it would be useful to look into the history of the Obama and Bush administrations’ approaches to the problem of vast financial fraud. As with most Obama government activities, it’s largely a story of policy continuity with the last administration, though the boom-bust cycle meant that there was not a huge amount of public pressure on the Bush administration to act, so their PR apparatus was less visible.
In 2009, President Obama established the Financial Fraud Enforcement Network, whose purpose was “to hold accountable those who helped bring about the last financial crisis, and to prevent another crisis from happening.” In the State of the Union, he basically re-established this network, adding a new member, Eric Schneiderman, who has been something of a thorn in the side of the administration. My guess is that at least one reason (but not the only reason) for agreeing to this is that Schneiderman believes he needs the extra resources to investigate the mortgage crisis. But the resources of the Federal government have proven useless because the people who are in government are uninterested in and incapable of holding financial interests accountable for their behavior.
I realized this a few months ago, after a fairly irritating email exchange with a college classmate named Sujit Raman, who is now an Assistant US Attorney in Maryland. Raman is exactly the kind of person you don’t want in public service, a budding corporate ladder climber whose expertise in his young career is about how to standardize deferred prosecution agreements. So of course he’s an Assistant US Attorney. When I asked him about his department’s absurd approach to mortgage fraud, he told me with a straight face that mortgage fraud is one of the top priorities of the FBI and the US Attorney’s Office, and referred me to a few cases he had prosecuted of petty crooks (here, here, and here). I thought it was a bizarre statement, since it’s obviously not true. But then I went back and looked at the statements from various DOJ and US Attorneys, and they actually think this.
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