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Press Release

May 6, 2009

Rep. Susan Davis Votes to Crack Down on Corporate Fraud

Bill will help pursue and prosecute corporate and mortgage fraud

WASHINGTON – Continuing Congress’ commitment to consumer protection and financial reform, Rep. Susan Davis (D-San Diego) voted to toughen the enforcement and prosecution of mortgage and corporate fraud.  The House or Representatives approved the bill on a vote of 367-59.

The Fraud Enforcement and Recovery Act (S. 386) will provide critical funding and tools to help law enforcement pursue and prosecute the type of fraud many blame for the worst financial crisis in decades. The legislation will also establish a bipartisan commission to investigate the causes of the collapse of our financial system and the ensuing recession.

“It’s important to ensure accountability,” said Davis. “Millions of Americans lost their savings, their homes and their jobs.  We want to maintain freedom in our markets but also give law enforcement the tools to go after corporate and mortgage fraud.”

Currently, the FBI has only 250 agents to investigate the more than 62,000 allegations of mortgage fraud reported to the Treasury Department.  In the last three years, the number of criminal mortgage fraud cases opened by the FBI has more than doubled.  The Fraud Enforcement and Recovery Act provides resources to add more agents to investigate these cases.

Mortgage lenders, not currently regulated by the federal government, would be put under the same rules as banks and traditional financial institutions.

The investigative commission created by this legislation will have subpoena power, and will seek to bring accountability to a system where reckless behavior has 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 this country for decades.

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