Feds Open Investigation Into Residential Mortgage-Backed Securities Market

Several days after President Obama announced that the federal government would begin an investigation into the mortgage-backed securities market, we now have some details: Attorney General Eric Holder, Housing and Urban Development (HUD) Secretary Shaun Donovan, SEC Director of Enforcement Robert Khuzami, and New York Attorney General Eric T. Schneiderman have announced the formation of the Residential Mortgage-Backed Securities Working Group under President Obama’s Financial Fraud Enforcement Task Force (FFETF).  

Holder said that the new Working Group will consist of at least 55 Department of Justice attorneys, analysts, agents and investigators from around the country.  Currently, 15 civil and criminal attorneys are part of the Working Group, along with 10 FBI agents and analysts who will be assigned to the Working Group efforts.  An additional 30 attorneys, investigators and other staff around the country will join the Working Group efforts in the coming weeks.  This team will join existing state and federal resources investigating similar misconduct under those authorities.
 
The government says that the goals of this collaboration 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 Americans finally turn the page on this destructive period in our nation’s history.
 
“This Working Group brings together federal and state partners to strengthen current and future efforts to investigate and prosecute instances of wrongdoing in the residential mortgage-backed securities market,” said Holder.  “With this focus on collaboration – and by bringing our government’s full enforcement resources to bear – I have no doubt that we will improve our ability to recover losses, to prevent fraud, to bring abuses to light, and to hold those who violate the law accountable.  That’s what the challenge before us demands, and that’s what the American people deserve.” 
 
The working group will be co-chaired by senior officials at the Department of Justice and SEC, including Lanny Breuer, Assistant Attorney General, Criminal Division, DOJ; Robert Khuzami, Director of Enforcement, SEC; John Walsh, U.S. Attorney, District of Colorado; and Tony West, Assistant Attorney General, Civil Division, DOJ.
 
The working group will also be co-chaired by New York Attorney General Schneiderman, who will lead the effort from the state level.  Other state Attorneys General have been and will be joining this effort, according to Holder.
 
President Obama created the Financial Fraud Enforcement Task Force by executive order in November 2009.  It has more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners.