Legal News

Mukasey Sums Up Mortgage Crisis: Enron or No Enron?

By Dan Slater

Yesterday, AG Mukasey rejected the idea of a national task force to combat the national mortgage crisis, leaving it to local prosecutors to oversee separate FBI investigations. According to this report in the NYT, Mukasey called the problem a localized one akin to “white-collar street crimes” and distinguished it from the Enron collapse, for which a task force was created. Click here for a story from April from the WSJ’s Evan Perez on Mukasey’s resistance to the idea.

“This is disappointing,” said Congressman Barney Frank (D-Ma.), who leads the House financial services committee. Frank told the times that the mortgage crisis is “worse than Enron,” and that “Enron didn’t cause a worldwide recession. This has more innocent victims.”

Frank said that a $2.4 billion bill to prevent mortgage foreclosure, which has already passed the House, includes a Republican-backed provision to provide an additional $300 million for law enforcement officials to fight mortgage fraud. He questioned how that money could be spent without a more centralized effort.

For his part, Mukasey acknowledged problems at every stage of the housing process: mortgage holders were not told the true terms of their loans, homes were overvalued, and investment firms put together mortgage-backed securities packages in ways that inflated their true value. “There will be more and we will prosecute it, where we see it,” he said. “There’s always more we can do. That said, I don’t see what you call the Enron-type task force. This isn’t that type of phenomena.”

Photo: Associated Press

Full post as published by Law Blog - WSJ.com on June 06, 2008 (boomark / email).