Legislation Creates Commission to Fully Investigate Causes of Financial Crisis
WASHINGTON, D.C. – May 7, 2009 – (RealEstateRama) — Today Congresswoman Capps voted for legislation that would significantly enhance the enforcement and prosecution of mortgage and corporate fraud in an effort to better protect consumers. The Fraud Enforcement and Recovery Act (S. 386) will provide vital funding and tools to help law enforcement pursue and prosecute the type of financial fraud that is widely thought to have contributed to the current financial crisis. The legislation will also establish a bipartisan commission to fully investigate the causes of the near-collapse of our financial system and the ensuing recession in an effort to prevent this type of crisis from occurring again.
“People throughout the Central and South Coasts have watched in horror over the past year as their retirement accounts have dwindled and their home values have declined as part of the larger economic crisis,” said Capps. “Much of this economic ruin probably could have been prevented had our financial regulations been stronger and more effective. The Fraud Enforcement and Recovery Act provides law enforcement with the tools it needs to stop the type of financial fraud that got us into this current mess and ensures that we will understand what conditions led to this crisis as we move forward with common sense reforms to prevent it from happening again in the future.”
The investigative commission created by this legislation will have subpoena power, and will seek to bring accountability to a system where reckless behavior had gone unchecked in the past. It is similar to the Pecora Commission established to investigate the 1929 stock market crash. That commission’s investigation uncovered the fraudulent and unscrupulous practices on Wall Street that led to the Great Depression and laid the groundwork for the regulatory structure that served the country for decades. That regulatory framework is woefully out-of-date and this helped create the conditions leading to our current economic crisis.
The Fraud Enforcement and Recovery Act is the latest in a series of consumer protection reforms recently passed by the House. Last week, the House passed the Credit Cardholders’ Bill of Rights, cracks down on credit card issuers and includes tough new protections for consumers facing excessive credit card fees, sky-high interest rates and unfair agreements. In addition, the House is expected to vote later this week on the Mortgage Reform and Anti-Predatory Lending Act to curb abusive and predatory lending.
