The formation of the Residential
Mortgage-Backed Securities Working Group tasked with investigating mortgage
fraud is now official. The new office,
which will be part of the Administrations Financial Fraud Enforcement Task
Force (FFETF) was first announced by President Obama in his State of the Union
speech on Tuesday.
At a press conference this morning (video below), Attorney General Eric Holder along with
Housing and Urban Development (HUD) Secretary Shaun Donovan, Securities and
Exchange Commission (SEC) Director of Enforcement Robert Khuzami and New York
Attorney General Eric T. Schneiderman, Holder outlined the mechanics of the working
group which will bring together the Department of Justice (DOJ), several state
attorneys general and other federal entities to investigate those responsible
for misconduct contributing to the financial crisis through the pooling and
sale of residential mortgage-backed securities.
The group will consist of at least 55 DOJ attorneys, analysts, agents,
and investigators from around the country including the 15 civil and criminal
attorneys and 10 FBI agents already employed in the FFETF unit. This team will join existing state and federal
resources investigating similar misconduct under those authorities.
Holder said that the goal of the group will be to hold accountable any
institutions that violated the law; to compensate victims and help provide
relief for homeowners struggling from the collapse of the housing market,
caused in part by this wrongdoing and to help turn the page “on this
destructive period in our nation’s history.”
Holder confirmed the principal staff that we identified here earlier this
week: Schneiderman will chair the group
with co-chairs Khuzami, Lanny Breuer, Assistant Attorney General, Criminal Division,
DOJ; John Walsh, U.S. Attorney, District of Colorado; and Tony West, Assistant
Attorney General, Civil Division, DOJ.
Schneiderman will lead the effort from the state level and will be
joined by other state attorneys general.
Schneiderman said, “In coordination with our federal partners, our office
will continue its steadfast commitment to holding those responsible for the
mortgage crisis accountable, providing meaningful relief for homeowners
commensurate with the scale of the misconduct, and getting our economy moving
again. The American people deserve a thorough investigation into the
global financial meltdown to ensure nothing like it ever happens again, and
today’s announcement is a major step in the right direction.”
The new office has been the target of criticism from Wall Street since the
President’s announcement such as that from JP Morgan Chase CEO Jamie Dimon who said
the working group would “derail” the proposed settlement between the states and
major banks, and Jaret Seiberg,
Senior Vice President of the Washington Research Group who told CNBC that the
sole purpose of the group is to bring criminal charges against bankers.