Eric Holder Vows to Fight Economic Crime
Attorney General Eric Holder told a bipartisan panel exploring the roots of the U.S. financial crisis that the Justice Department is using "every tool at its disposal" to fight the financial crimes that contributed to the meltdown and could cause another.
Holder said fighting financial crime will foster confidence in the system. He is appearing before the Financial Crisis Inquiry Commission in its second day of hearings.
Securities and Exchange Commission Chairman Mary Schapiro will tell the panel her agency has been reviewing its operations in light of crimes exposed by the crisis, according to prepared remarks.
The panel also is hearing from Federal Deposit Insurance Corp. Chairman Sheila Bair and other regulators and law enforcement officials.
Bair said the financial crisis exposed fundamental weaknesses in the financial regulatory system. The Obama administration has proposed a sweeping overhaul of that system. The House passed a version last year, and the Senate is working on a separate compromise.
Holder highlighted the work of a new interagency Financial Fraud Enforcement Task Force created by President Barack Obama to coordinate efforts between the Justice Department and other agencies.
The regulators and officials are expecting to discuss investigations into crimes that became known during the crisis, including mortgage fraud and the large financial crimes like the landmark pyramid scheme perpetrated by Bernard Madoff. The SEC came under fire for failing to detect frauds by Madoff and others in the years before the crisis.
At the first hearing Wednesday, top Wall Street bankers apologized for risky behavior that led to the worst financial crisis since the Great Depression. But they still declared it seemed appropriate at the time.
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The bankers - whose firms collectively received more than $100 billion in taxpayer aid to weather the crisis - offered no regrets for executive pay that's now likely to increase as a result of their survival. They did say they are correcting some compensation practices that could lead to excessive risk-taking.
The hearings come amid growing calls in Washington to hold banks and financial executives accountable for their bad bets rather than merely compensating them for good ones.
House Financial Services Committee Chairman Barney Frank, D-Mass., said he will hold a hearing next week on bank compensation, looking to expand legislation that has passed the House. And Sen. Bill Nelson, D-Fla., wrote to Obama on Wednesday to suggest legislation that would use banks' tax breaks as incentives for pay based on performance.
On Thursday, Obama is expected to announce a new fee on the country's biggest financial firms to allow taxpayers to recover up to $120 billion from bailouts.
Besides Holder, Madigan, Bair and Schapiro, also scheduled to testify to the panel Thursday are Assistant Attorney General Lanny Breuer; Colorado Attorney General John Suthers; Denise Voigt Crawford, commissioner of the Texas Securities Board; and Glenn Theobald, chief counsel of the Miami-Dade County Police Department.
The commission is chaired by former California Treasurer Phil Angelides, a Democrat. His vice chairman is Republican Bill Thomas, a former California congressman who chaired the House Ways and Means Committee.
The commission is modeled on the panel that examined the causes of the Sept. 11, 2001, terrorist attacks. But its prototype could be the Pecora Commission, the Senate committee that investigated Wall Street abuses in 1933-34. It was named after Ferdinand Pecora, the committee's chief lawyer.
Congress instructed the commission to explore 22 issues, ranging from the effect of monetary policy on terms of credit to bank compensation structures.