The UPI article, President Signs Mortgage, Fraud Bills, notes:
- the mortgage-related Act "expands an existing $300 billion program that encourages lenders to write down an individual's mortgage if the homeowner agrees to pay an insurance premium."
- the fraud-related Act, FERA, "authorizes $490 million over two years to hire fraud prosecutors, increase enforcement actions and add funds to the Secret Service and Housing and Urban Development Inspector General."
Additional information on the Helping Families Save Their Homes Act can be found in this summary posted yesterday on the House Financial Services Committee website.
We previously provided some highlights of FERA last week, based on the House and Senate versions of the bill as of May 12.
UPDATE 8:00 PM EDT:
As noted in the White House Blog:
- The Fraud Enforcement and Recovery Act gives the federal government more tools to crack down on the kind of fraud that put thousands of hardworking families at risk of losing their homes despite doing everything right to live within their means. It expands the Department of Justice’s ability to prosecute at virtually every step of the process from predatory lending on Main Street to the manipulation on Wall Street. It also creates a bipartisan Financial Crisis Inquiry Commission to investigate the financial practices that brought us to this point, so that we make sure it never happens again.
According to this White House Fact Sheet, FERA:
- authorizes up to $165 million in new resources for FY 2010 and 2011 to hire fraud prosecutors and investigators.... The legislation authorizes $140 million for the FBI, $50 million for U.S. Attorney’s Offices; $20 million for the Criminal Division, $15 million for the Civil Division, $5 million for the Tax Division, $30 million for the US Postal Inspection Service, $30 million for the Inspector General at the Department of Housing and Urban Development, $20 million for the Secret Service, and $21 million for the Securities and Exchange Commission.
- creates a bipartisan Financial Crisis Inquiry Commission [see below] to investigate the financial practices that brought us to this point, so that we make sure it never happens again.
- amends the definition of a "financial institution" in the criminal code, extending Federal laws to private mortgage brokers and companies that are not directly regulated or insured by the Federal Government. This will expand the Department of Justice’s authority to prosecute mortgage fraud involving private mortgage institutions under a variety of statutes.
- changes the mortgage applications statute to make it a crime to make a materially false statement or to willfully overvalue a property in order to influence any action by a mortgage lending business. Currently, the offense only applies to federally-regulated institutions.
- amends the major fraud statute to protect funds expended under TARP and the Recovery Act.
- amends the Federal securities statute to cover fraud schemes involving commodity futures and options. Currently, the statute does not reach frauds involving options or futures, which include some of the derivatives and other financial products that were part of the financial collapse
- modifies the False Claims Act (FCA) to eliminate the requirement that a false claim be presented to a federal official, or that it directly involve federal funds, and amend the FCA reverse false claims provision to ensure that the knowing retention of an overpayment is a violation.
Accounting Among Issues To Be Examined By Financial Crisis Inquiry Commission
According to the House version of the bill dated May 6, as noted in our May 12 post, the issues to be examined by the Financial Crisis Inquiry Commission include fraud and abuse in the financial sector, federal and state regulators response to the crisis, capital requirements, the role of credit rating agencies, and numerous other matters, including "accounting practices, including, mark-to-market and fair value rules, and treatment of off-balance sheet vehicles."
Hat tip to Cady North, Manager of Government Affairs in FEI's Washington DC office for alerting us to the legislation was expected to be signed this afternoon/this evening. FEI members interested in following developments with respect to Financial Regulation Reform, contact Cady at firstname.lastname@example.org.
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