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Can't let those rules, regulations and oversight get in the way of failed Rep. policies could we?

Ex-FBI official: Mortgage fraud agents need help [The Charlotte Observer, N.C.] 01/28 09:04 AM



Jan. 28--Former Charlotte FBI official Chris Swecker told the Financial Crisis Inquiry Commission that his effort to win more resources to combat mortgage fraud was an "uphill slog."
As special agent in charge in Charlotte from 1999 to 2004, Swecker began noticing rising mortgage fraud and investigated a lender for selling fraudulent loans to Fannie Mae (FNMA:$0.52,00$0.01,001.96%) . Later, when he became assistant FBI director for investigations, he gave pointed testimony on the issue before Congress.
But Swecker told the crisis commission that all of his funding requests were cut at either the director level at the FBI, at the Justice Department or at the Office of Management and Budget. He also unsuccessfully pushed lawmakers to force all lenders to forward information about criminal fraud to regulators and law enforcement agencies. Federally insured banks are required to file "suspicious activity reports," but many mortgage lenders weren't covered by the provision.

"We really felt this was an early warning," Swecker told the Observer Thursday. "We were sure looking for some listeners and couldn't get it."
At the time, the FBI needed a "couple of hundred" additional agents to focus on mortgage fraud, Swecker said, but resources were being steered to the fight against terrorism. FBI director Robert Mueller told the commission that mortgage fraud needed to be considered in the context of other priorities, including terrorism.
The FBI allocated more resources to mortgage issues, Mueller said, but "I am not going to tell you that that is adequate for what is out there." In the aftermath of the financial crisis, the FBI continues to probe mortgage fraud, Mueller said, indicating some prosecutions may still be in the works, according to the report.
Swecker told the Observer the lesson from the Savings and Loan crisis in the 1980s and 1990s and the corporate fraud cases uncovered after the collapse of Enron Corp. in the 2000s was that authorities needed a "surge" of resources to attack the problem. "We weren't allowed to surge on the mortgage fraud," he said.
He said he has seen prosecutions of lower-level mortgage frauds but would like to see more attention on higher-level activities, such as the packaging of mortgages into securities for investors. In that area, "we've seen a lot of civil fraud cases, but very few criminal ones," he said.
Swecker left the FBI in 2006 to lead Bank of America Corp.'s (BAC:$14.01,00$0.3400,2.49%) corporate security division. After departing the bank in 2008, he is now a practicing attorney and consultant in Charlotte. He said he gives speeches to banks in which he emphasizes the relationship between rising fraud and subsequent loan losses.
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