The formation of the Residential Mortgage-Backed Securities Working Group tasked with investigating mortgage fraud is now official. The new office, which will be part of the Administrations Financial Fraud Enforcement Task Force (FFETF) was first announced by President Obama in his State of the Union speech on Tuesday.
At a press conference this morning (video below), Attorney General Eric Holder along with Housing and Urban Development (HUD) Secretary Shaun Donovan, Securities and Exchange Commission (SEC) Director of Enforcement Robert Khuzami and New York Attorney General Eric T. Schneiderman, Holder outlined the mechanics of the working group which will bring together the Department of Justice (DOJ), several state attorneys general and other federal entities to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. The group will consist of at least 55 DOJ attorneys, analysts, agents, and investigators from around the country including the 15 civil and criminal attorneys and 10 FBI agents already employed in the FFETF unit. This team will join existing state and federal resources investigating similar misconduct under those authorities.
Holder said that the goal of the group will be to hold accountable any institutions that violated the law; to compensate victims and help provide relief for homeowners struggling from the collapse of the housing market, caused in part by this wrongdoing and to help turn the page "on this destructive period in our nation's history."
Holder confirmed the principal staff that we identified here earlier this week: Schneiderman will chair the group with co-chairs Khuzami, Lanny Breuer, Assistant Attorney General, Criminal Division, DOJ; John Walsh, U.S. Attorney, District of Colorado; and Tony West, Assistant Attorney General, Civil Division, DOJ. Schneiderman will lead the effort from the state level and will be joined by other state attorneys general.
Schneiderman said, "In coordination with our federal partners, our office will continue its steadfast commitment to holding those responsible for the mortgage crisis accountable, providing meaningful relief for homeowners commensurate with the scale of the misconduct, and getting our economy moving again. The American people deserve a thorough investigation into the global financial meltdown to ensure nothing like it ever happens again, and today's announcement is a major step in the right direction."
The new office has been the target of criticism from Wall Street since the President's announcement such as that from JP Morgan Chase CEO Jamie Dimon who said the working group would "derail" the proposed settlement between the states and major banks, and Jaret Seiberg, Senior Vice President of the Washington Research Group who told CNBC that the sole purpose of the group is to bring criminal charges against bankers.