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Obama signs financial fraud legislation to create investigatory commission

By Bernard Hibbitts (editor) and University of Pittsburgh School of Law students.

[JURIST] US President Barack Obama on Wednesday signed into law the Fraud Enforcement and Recovery Act, which aims at expanding the federal government's authority to prosecute acts of financial fraud. Obama said that the legislation would "ensure that the problems that led us into this crisis never happen again." The bill, approved by the House of Representatives on Monday, seeks to improve the enforcement of fraud resulting from mortgages, securities and commodities, financial institutions, and federal assistance and relief programs and to recover funds lost to such fraudulent activities. The bill establishes a "financial crisis inquiry commission" made up of 10 people with subpoena power appointed by both the majority and minority leaders of the Senate and House. The commission will examine "the causes of the current financial and economic crisis in the United States," as well as "the causes of the collapse of each major financial institution that failed." The Act requires "any department, agency, bureau, board, commission, office, independent establishment, or instrumentality of the United States" to give the commission any information related to their inquiries, including confidential information. Obama also approved the Helping Families Save Their Homes Act on Wednesday, a legislative attempt at stabilizing and reforming US financial and housing markets. In April, the House approved a bill which allows the Treasury Department to ban certain types of compensation at companies which receive federal bailout money from the Troubled Asset Relief Program (TARP). In March, the House passed a bill that would tax bonuses given to employees of companies that received money from government stimulus programs at 90 percent. The bill was drafted and voted on in reaction to large bonus payments made to employees of American International Group (AIG). Attempts to gain control over the disrupted credit markets and possible widespread bank insolvencies have included the passage in September of a $700 billion financial rescue bill, creating the Troubled Assets Relief Program (TARP), which provided economic assistance to at-risk financial institutions.

Full post as published by JURIST - The Paper Chase on May 21, 2009 (boomark / email).