Tuesday, September 13, 2011

Unaccountable To Executive Branch, Federal Agency May Be The Needed 'Loose Cannon' To Hold Banksters Personally Responsible For Roles In Fin'l Crisis

Reuters reports:

  • By suing 131 individuals in its effort to recover losses on $200 billion of mortgage debt that went sour, the federal agency overseeing mortgage giants Fannie Mae and Freddie Mac is doing one thing that the U.S. government has largely left alone.

  • It is trying to hold actual people, not just companies, responsible for their roles in the global financial crisis. The 18 lawsuits(1) by the Federal Housing Finance Agency, including 17 filed last week and one in July, signal a change from prior federal efforts to punish banks and bankers for their roles in the financial crisis.

  • That difference may stem in part from the FHFA's belief that it has enough evidence to pursue civil claims against banking executives. Its lawsuits draw on information generated by 64 subpoenas issued last year for details on pools of mortgage securities that Fannie Mae and Freddie Mac bought. They also draw on probes by a U.S. Senate investigation subcommittee and the Financial Crisis Inquiry Commission, among other sources.

  • Most of the higher-profile financial crisis cases brought by the Department of Justice, such as its civil fraud against Deutsche Bank AG, or the Securities and Exchange Commission have named few or no individual defendants. So far, no top executives at major banks have been criminally charged.

  • "Each agency has its own statutory authority, and its own particular evidence," said Peter Swire, a law professor at Ohio State University and former special assistant to the president for economic policy in the Obama administration.

  • "The FHFA is not part of the executive branch," Swire added. "It does not report to the president. If the FHFA finds the right evidence, it decides on its own to move forward."

For more, see Analysis: Mortgage cases target people, not just banks.

See also:

(1) For a link to the 18 lawsuits, please click here.

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