The panel — which will be chaired by Attorney General Eric Holder and include officials from the Securities and Exchange Commission, the Departments of Justice, Treasury, and Housing and Urban Development — will focus on investigating and prosecuting crimes connected to the past year’s financial crisis as well as deterring future fraud.
“We will be relentless in our investigation of corporate and financial wrongdoing and we will not hesitate to bring charges, where appropriate, for criminal misconduct on the part of businesses and business executives,” Holder said at a news conference announcing the task force.
The announcement follows a Nov. 13 report by the Justice Department’s inspector general classifying financial crimes as one of the agency’s 10 biggest enforcement challenges. According to the report, the recession has led to a spike in financial crimes, including mortgage fraud, health care fraud and trading scams. Overall, the FBI is investigating more than 189 cases of corporate fraud — 18 of which had losses greater than $1 billion.
While the Obama administration has made combating white-collar crime one of its top domestic priorities — particularly in the wake of Bernie Madoff’s massive Ponzi scheme – it has suffered a string of embarrassing setbacks. Last week, for example, the Justice Department lost a pivotal criminal fraud case against a pair of former managers at Bear Stearns whose hedge funds collapsed during the early stages of the financial crisis.
Treasury Secretary Timothy Geithner said that in addition to prosecuting fraud, regulation of the financial system must be overhauled in order to prevent future crises.
“We can’t wait for problems to peak before we respond,” Geithner said in a statement. “We’re seeking a comprehensive financial reform to create a more stable, safe financial system and stepping up our enforcement strategy.”