|
By Ronald Fink
Some critics of the Obama administration's efforts to rein in big banks complain that very few enforcement actions have been taken against perpetrators of fraud involving subprime lending and other activities that helped lead to the financial crisis.
But that judgment looks premature. As part of its mission to oversee the bank bailout, the office of the Special Inspector General for the Troubled Asset Relief Program, Neil Barofsky, has been investigating a wide array of questionable financial activities beyond those involving the TARP.
According to its latest quarterly report to Congress, which was released on Saturday, the office has 77 investigations under way, and they involve TARP fraud, accounting fraud, securities fraud, bank fraud, mortgage fraud, mortgage servicer misconduct, fraudulent advance-fee schemes, public corruption, false statements, obstruction of justice, money laundering, and tax-related investigations.
The report described a number of cases whose details were recently publically disclosed, including those involving Omni National Bank, Bank of America, and Colonial Bancgroup. It also mentioned an insider-trading investigation of one of the nine investment advisers taking part in the Public Private Investment Program, which the Treasury set up to help dispose of troubled assets that the government took off banks' hands.
Just weeks after trading in such assets began last October, a fund manager for one of the firms sold assets from a private fund he oversaw after they were downgraded, and later that day bought the assets at a higher price for a fund participating in the PPIP, according to the report.
The SIGTARP report declined to identify the fund manager, and noted that the Treasury has said the transaction did not violate the program's rules. But it said the SIGTARP would continue to investigate the case and that it raised questions about the Treasury's decision not to erect "walls" between funds taking part in the program, so-called Public Private Investment Funds, and others run by the same management firm.
"Even assuming that the answers to all of these questions reveal that the trades in this case did not violate the PPIF rules, the fact that these issues require examination in the first instance is the direct result of Treasury's refusal to require information barriers or walls in PPIP," the report said.
The SIGTARP's investigations now dovetail with the efforts of the Financial Fraud Enforcement Task Force, which the White House created in late November. While the FFETF consists of dozens of criminal and civil law enforcement agencies and regulatory bodies, the SIGTARP chairs one of its working groups. The inaugural meeting of the FFETF was chaired by Attorney General Eric Holder on December 15.
As the SIGTARP report put it, the task force is designed "to investigate and prosecute significant financial crimes and other violations relating to the current financial crisis and economic recovery efforts, recover the proceeds of such crimes and violations, and ensure just and effective punishment of those who perpetrate financial crimes and violations."
 |
in In Compliance by 
Subscribe to this comment's feed
