On May 6, the House of Representatives voted overwhelmingly to pass, with amendments, a Senate bill to improve enforcement of securities fraud, financial institutions fraud and mortgage fraud. The bill also addresses fraud related to federal assistance and relief programs. According to a summary of the bill posted on the CCH Financial Crisis News Center, the Fraud Enforcement and Recovery Act of 2009 ("FERA") expands the scope of securities fraud provisions and extends the prohibition against defrauding the federal government to the TARP program and to the stimulus bill. Among other elements of the bill, FERA implements significant improvements to fraud and money laundering statutes to strengthen the government's ability to combat the increase in fraud activities within the financial services sector.
A key element of the bill is an expanded budget for the U.S. Department of Justice to investigate and prosecute financial fraud. Specifically, the bill authorizes appropriations to the Attorney General for FY2010-FY2011 for investigations, prosecutions, and civil and administrative proceedings involving federal assistance programs and financial institutions. The bill requires that the DOJ use an appropriate percentage of such funds to investigate mortgage fraud. Similar additional appropriations are authorized for the U.S. Postal Service, the Inspector General for the Department of Housing and Urban Development (HUD), the U.S. Secret Service, and the Securities and Exchange Commission (SEC):
The bill also proposes the creation of a "9/11" style commission called the "Financial Markets Inquiry Commission," which would undertake a bipartisan examination of the mortgage crises and other issues that led to the current financial crisis. Senate co-sponsors of the amendment to create the Commission, Senators Johnny Isakson (R-GA) and Kent Conrad (D-ND), issued a release stating that “the only way to get an objective evaluation of where mistakes were made is to create an independent commission of experts to ask what went right, what went wrong and what could we have done to prevent this. We need a forensic audit of the laws of the United States as it relates to the financial markets and our economy.”
The bill now returns to the Senate, where the Senate can agree to the House amendments or ask for a conference to compromise on the differences in the two bills. Assuming agreement, the bill will move to the president for consideration.
