Irony Alert! Irony Alert! Republican Senator Tom Coburn’s reaction to the bill expanding federal fraud laws to cover mortgage lenders and money spent under the TARP program, a bill he was one of only four senators to vote against:
“I would tell you the biggest person or group of people responsible for the problem we face today is the Congress,” said Sen. Tom Coburn, R-Okla., a Senate Judiciary Committee member. “We failed to do our job on oversight.”
Gee Tom, what a brilliant insight. Except who was in charge of Congress for most of the last eight years? I guess lack of Congressional oversight is only an issue when Democrats hold the reins of power. You see Congress didn’t do enough to prevent the financial crisis, yet when they do do something to prevent future abuses, Coburn was one of only four senators to oppose such action (for the record they were all Republicans: Coburn, Kyl, DeMint, and Inhofe). Hell Tom, even Mitch McConnell voted for this bill.
These people are really too hypocritical for words.
By the way, just for kicks, here’s some excerpts from the Senate Judiciary Committee’s report on the need for this bill (a committee now thankfully controlled by Democrats and not Republicans):
While the full scope of the fraud that helped trigger the economic crisis is still unknown, we do know a great deal about what went wrong. As banks and private mortgage companies relaxed their
standards for loans, approving ever riskier mortgages with less and less due diligence, they created an environment that invited fraud. Private mortgage brokers and lending businesses came to dominate
the home housing market, and these companies were not subject to the kind of banking oversight and internal regulations that had traditionally helped to prevent fraud. We are now seeing the results of this lax supervision and accountability.In the last six years, suspicious activity reports alleging mortgage fraud that have been filed with the Treasury Department have increased nearly tenfold to more than 62,000 in 2008. In the last three years, the number of criminal mortgage fraud investigations
opened by the Federal Bureau of Investigation (FBI) has
more than doubled, and the FBI anticipates a new wave of cases that could double that number yet again in coming years. Despite these increases, the FBI currently has fewer than 250 Special Agents nationwide assigned to these financial fraud cases. At current
levels, they cannot individually review, much less thoroughly investigate, the more than 5,000 fraud allegations received by the Treasury Department each month.Of course, the problem is not limited to mortgage frauds. As is so common in today’s financial markets, home mortgages were packaged together and turned into securities that were bought and sold in largely unregulated markets on Wall Street. Here again, the
environment invited fraud. As the value of the mortgages started to decline with falling housing prices, Wall Street financiers began to see these mortgage-backed securities unravel. Unfortunately,
some were not honest about these securities, leading to even more fraud and victimizing investors nationwide. […]To make sure this kind of collapse cannot happen again, we must reinvigorate our anti-fraud measures and give law enforcement agencies the tools and resources they need to root out fraud so that it can never again place our financial system at risk. Taxpayers, who bear the burden of this financial downturn, deserve to know that the Government is doing all it can to hold responsible those who committed fraud in the run-up to this collapse. […]
The bill authorizes $165 million a year for hiring fraud prosecutors and investigators at the Justice Department in fiscal years 2010 and 2011. This includes $75 million in 2010 and $65 million in 2011 for the FBI to hire 190 additional special agents and more than 200 professional staff and forensic analysts to nearly double the size of its mortgage and financial fraud program. With this funding, the FBI can expand the number of its mortgage fraud task
forces nationwide—from 26 to more than 50—that target fraud in the hardest hit areas in our Nation. This authorization also includes $50 million a year for U.S. Attorneys’ Offices to staff those strike forces and $40 million for the Criminal, Civil, and Tax Divisions at the Justice Department to provide special litigation and investigative support in those efforts. In addition, the bill authorizes $80 million a year for fiscal years 2010 and 2011 for investigators
and analysts at the U.S. Postal Inspection Service, the U.S. Secret Service, and the Office of Inspector General for the Department of Housing and Urban Development to combat fraud in Federal assistance
programs and financial institutions.This legislation also makes a number of important improvements to fraud and money laundering statutes to strengthen prosecutors’ ability to combat this growing wave of fraud. Specifically, the bill amends the definition of ‘‘financial institution’’ in the criminal code (18 U.S.C. § 20) in order to extend Federal fraud laws to mortgage lending businesses that are not directly regulated or insured by the Federal Government. These companies were responsible for nearly
half the residential mortgage market before the economic collapse, yet they remain largely unregulated and outside the scope of traditional Federal fraud statutes. This change would apply the Federal
fraud laws to private mortgage businesses, just as they apply to federally insured and regulated banks. […]The legislation would amend the Federal securities statute (18 U.S.C. § 1348) to cover fraud schemes involving commodities futures and options, including derivatives involving the mortgage backed securities that caused such damage to our banking system.
This bill would amend the Federal money laundering statutes (18 U.S.C. §§ 1956, 1957) to correct an erroneous Supreme Court decision in 2008 that significantly weakened these statutes. In United States v. Santos, the Supreme Court misinterpreted the money laundering statutes, limiting their scope to only the ‘‘profits’’ of crimes, rather than the ‘‘proceeds’’ of the offenses. 128 S. Ct. 2020 (2008). The Court’s decision was contrary to Congressional intent and will lead to criminals escaping culpability simply by claiming their illegal scams did not make any profit. Indeed, proceeds of ‘‘Ponzi schemes’’ like the Bernard Madoff case, which by their very nature do not include any profit, would be out of the reach of
the money laundering statutes under this decision. This flawed decision needs to be corrected immediately, as dozens of significant money laundering cases have already been dismissed.Lastly, FERA improves one of the most potent civil tools for rooting out waste and fraud in Government—the False Claims Act (18 U.S.C. § 3729 et seq.). The effectiveness of the False Claims Act has
recently been undermined by court decisions which limit the scope of the law and, in some cases, allow subcontractors paid with Government money to escape responsibility for proven frauds. The False Claims Act must be corrected and clarified in order to protect
from fraud the Federal assistance and relief funds expended in response to our current economic crisis.
Guess who underfunded enforcement of existing fraud laws and reduced or rejected expansion of federal regulation of the financial industry back when this crisis was developing and hindered regulation of the financial markets? I’ll give you three guesses, and no, Barney Frank, Democrats in general and/or Fannie Mae and Freddie Mac aren’t the correct answers, my conservative friends.
Of course, I doubt anything I could say would convince those misguided fools who still reside deep within their delusional ideological belief system which says government regulation is always bad, despite all recent evidence to the contrary regarding the catastrophic effects of the Federal Government’s a failure to adequately regulate the financial industry. People like Tom Coburn, for example. Oddly enough, one voice of reason from the Republican side (and I have to suppress my gag reflex when I say this) is Republican Representative Darrell Issa, not exactly a flaming liberal by any stretch of the imagination, who had this to say about the bill:
“This [bill] is so much better than nothing at all,” [Issa] said.
Yeah, Darrell, it sure as hell is.
