IE 11 is not supported. For an optimal experience visit our site on another browser.

Obama orders task force to fight financial crime

The Obama administration created a new task force on Tuesday vowing to crack down on financial fraud following a rise in mortgage scams and high-profile Wall Street trading scandals.
Image: Treasury Secretary Tim Geithner
Treasury Secretary Timothy Geithner, flanked by Attorney General Eric Holder, left, and Housing Urban Development Secretary Shaun Donovan, speaks during a news conference on financial fraud efforts, Tuesday, at the Justice Department in Washington.Manuel Balce Ceneta / AP
/ Source: Reuters

The Obama administration created a new task force on Tuesday vowing to crack down on financial fraud following a rise in mortgage scams and high-profile Wall Street trading scandals.

President Barack Obama signed an executive order directing the task force to investigate and prosecute financial crimes connected to the past year's financial crisis and to try to deter future fraud.

The stakes are high for the administration, particularly with a weak economy, anger about huge Wall Street bonuses and outrage that securities regulators missed one of the biggest frauds in U.S. history involving Bernard Madoff, who bilked investors of as much as $65 billion in a decades-long scheme.

"We will be relentless in our investigation of corporate and financial wrongdoing and we will not hesitate to bring charges, where appropriate, for criminal misconduct on the part of businesses and business executives," Attorney General Eric Holder told a news conference.

The administration has long pledged to be more aggressive in fighting financial crime, but has faced a few setbacks like Madoff and losing a high-profile case against two hedge fund managers accused of fraud in the early days of the crisis.

Treasury Secretary Timothy Geithner said that in addition to prosecuting fraud, the financial system must also be overhauled to address the problems that created the crisis. Congress is now weighing a package of reforms.

"We can't wait for problems to peak before we respond," Geithner said in a statement. "We're seeking a comprehensive financial reform to create a more stable, safe financial system and stepping up our enforcement strategy."

The task force will be chaired by Holder and will include the Justice, Treasury and Housing and Urban Development departments and the Securities and Exchange Commission, among other government agencies.

No big enforcement cases were unveiled as part of the task force announcement.

The task force comes a week after the Justice Department lost a pivotal criminal fraud case in New York against two managers from Bear Stearns whose hedge funds collapsed at the early stages of the financial crisis. Securities regulators still plan to pursue their own charges against the two men.