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H.R. 1350 (112th): Financial Crisis Criminal Investigation Act


The text of the bill below is as of Apr 4, 2011 (Introduced). The bill was not enacted into law.


I

112th CONGRESS

1st Session

H. R. 1350

IN THE HOUSE OF REPRESENTATIVES

April 4, 2011

(for herself, Ms. Waters, Ms. Schakowsky, Ms. Woolsey, Mr. Jackson of Illinois, Ms. Tsongas, and Ms. Norton) introduced the following bill; which was referred to the Committee on the Judiciary, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To provide additional resources for Federal investigations and prosecutions of crimes related to the 2008 Financial Crisis, and for other purposes.

1.

Short title

This Act may be cited as the Financial Crisis Criminal Investigation Act.

2.

Findings

Congress finds the following:

(1)

The Federal Bureau of Investigation (FBI) has testified that today’s financial crisis dwarves the S&L crisis as financial institutions have reduced their assets by more than $1 trillion related to the current global financial crisis compared to the estimated $160 million lost during the S&L crisis. (Testimony by Mr. John Pistole, Deputy Director of the Federal Bureau of Investigations of the United States Department of Justice before the U.S. Senate Committee on the Judiciary, February 11, 2009).

(2)

The FBI has testified that mortgage fraud was such a major contributor to the current global financial crisis that: it would be irresponsible to neglect mortgage fraud’s impact on the U.S. housing and financial markets.

(3)

In the late 1980s and early 1990s, the United States experienced a similar financial crisis with the collapse of the Savings and Loan institutions. Again, according to Deputy Director Pistole, the Department of Justice (DOJ), [and more specifically the FBI], were provided a number of tools through the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) and Crime Control Act of 1990 (CCA) to combat the aforementioned crisis. As stated in Senate Bill 331 dated January 27, 2009, in the wake of the Savings and Loan crisis of the 1980s, a series of strike forces based in 27 cities was staffed with 1,000 FBI agents and forensic experts and dozens of Federal prosecutors..

(4)

Fraud also played a decisive role in the Savings and Loan crisis. The FBI and Justice Department made prosecuting those elite frauds among its highest priorities. This took a massive commitment of FBI resources, but it produced the most successful prosecution of an epidemic of elite fraud in history—over 1,000 “priority” felony convictions of senior insiders, according to Professor William K. Black in his book The Best Way to Rob a Bank is to Own One.

(5)

However, the FBI, because of its crippling personnel limitations, has been unable to assign sufficient FBI agents assigned to investigate the current global financial crisis. The FBI identified the mortgage fraud “epidemic” in congressional testimony in September 2004. It had so few white-collar crime specialists available, however, that it was able to assign only 120 special agents to mortgage fraud cases—less than one-eighth the agents it found essential to respond adequately to the huge, but far smaller, Savings and Loan crisis.

(6)

Given the magnitude of the financial crisis of 2008 and the resulting losses and billions of taxpayer dollars spent to keep the financial system from collapsing, the FBI should have no less than 1,000 agents to address corporate, securities, and mortgage fraud located across the country, and, in addition, more forensic experts and Federal prosecutors to uncover the crimes committed and bring the perpetrators to justice.

(7)

This authorization is expected to bring the FBI and prosecutorial staffing to the necessary levels to investigate complex financial crimes and prosecute those who have committed these crimes.

3.

Allowable use of funds

The funds authorized in this Act shall be used for the following:

(1)

The hiring of additional employees, including the hiring of 1,000 FBI agents and, in addition, a sufficient number of forensic experts, by the Director of the Federal Bureau of Investigation in the Department of Justice to investigate corporate, securities, and mortgage fraud, and associated violations of the law relating to the United States financial markets.

(2)

The hiring of additional employees by the Attorney General of the Department of Justice to prosecute violations of the laws relating to the United States financial markets.

(3)

The hiring of additional employees by the Chair of the Securities and Exchange Commission Division of Enforcement to investigate and prosecute violations of the law relating to United States financial markets.

4.

Authorizations

There are authorized to be appropriated to carry out this Act such sums as necessary for fiscal year 2011, fiscal year 2012, fiscal year 2013, and fiscal year 2014. Such sums shall be available until obligated.