On April 1, the House Judiciary Committee held a hearing entitled “Proposals to Fight Fraud and Protect Taxpayers,” to discuss a number of proposed bills intended to protect taxpayers from financial crimes and fraud. Testifying before the Committee were:
- Elijah Cummings (D-MD), U.S. House of Representatives
- Judy Biggert (R-IL), U.S. House of Representatives
- Neil Abercrombie (D-HI), U.S. House of Representatives
- Rita Glavin, Acting Assistant Attorney General, DOJ, Criminal Division
- John Pistole, Federal Bureau of Investigation
- Jonathan Mintz, NYC Dept of Consumer Affairs
- Ira Rheingold, National Association of Consumers Advocates
- Barry Pollak, National Association of Criminal Defense Lawyers
- Marcia Madsen, Institute of Legal Reform, Chamber of Commerce
- Jeb White, Taxpayers Against Fraud
Legislation discussed by the panelists included H.R. 1748, the "Fight Fraud Act 2009"; H.R. 1292, to amend Title I of the Omnibus Crime Control and Safe Streets Act of 1968; H.R. 1667, the "War Profiteering Prevention Act of 2009"; H.R. 1788, the "False Claims Corrections Act"; H.R. 1779, the "Financial Crimes Resources Act of 2009"; H.R. 1793, the "Money Laundering Correction Act of 2009"; and H.R. 78, the "Stop Mortgage Fraud Act."
At the hearing, there seemed to be broad support for most of the proposed legislation, which reflected the Committee’s general understanding that some type of legislative response is necessary to address financial crime. Representatives from the DOJ as well as the FBI were present and explained that their respective agencies are working with other government entities (including federal, state, and local law enforcement agencies) and the private sector to investigate financial crimes such as mortgage fraud. Improved coordination between different levels and branches of government was presented as a goal, as were increasing the number of investigations and helping to provide victims with restitution for their losses.
Also discussed was the role of securitization of assets and mortgages in the current mortgage crisis. Consumer advocate Ira Rheingold claimed that the increased securitization of home mortgages created “perverse incentives,” since the borrower’s best interest and ability to repay the loan were not as important as the transaction between mortgage originators and investment banks, “which not only set the standards for the borrower/product they wanted to buy (and then turn around and sell), but also provided the money for the originators’ loans.” Rheingold stated that, under these conditions, consumers needed increased consumer protections, along with vigorous enforcement of these protections. Instead, he claims that consumers were met with decreased financial regulation and government protection of mortgage market players.