One year has passed since the U.S. Department of Justice issued a memo stating they planned to prosecute individuals and not just firms for their roles in the crisis, but they have yet to do so—and one lawmaker is asking the FBI why.
U.S. Rep. Bill Pascrell (D-New Jersey), a member of the Ways and Means Committee, wrote a letter this week to FBI Director James Comey asking him to release unclassified case files related to the FBI’s investigation of financial institutions and their possible roles in the 2008 financial crisis.
“The FBI, as early as 2004, expressed concerns about mortgage industry practices. It has been reported that the agency identified suspected mortgage fraud more widely by 2008. It was at this point that the agency opened criminal inquiries into at least 14 companies as part of its investigation into the subprime-mortgage crisis. Reports indicate that the agency focused on accounting fraud, securitization of loans, and insider trading,” Pascrell stated in the FBI letter. “However, several years later, no senior executives have been charged.”
The DOJ memo was sent out in September 2015 by Deputy Attorney General Sally Yates to all state attorneys general.
“One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetuated the wrongdoing,” Yates wrote in the memo. “Such accountability is important for several reasons: it deters future illegal activity, it incentivizes changes in corporate behavior, it ensures that the proper parties are held responsible for their actions, and it promotes the public's confidence in our justice system.”
However, one year since the memo and eight years since the crisis, no individuals have been penalized. Several large firms have settled with the DOJ in the last three years, however. The DOJ has settled with JPMorgan Chase (a then-record $13 billion in November 2013), Citi ($7 billion in July 2014), and Bank of America (a record $16.65 billion in August 2014) for selling toxic-mortgage backed securities to investors in the run-up to the crisis.
In June 2016, the DOJ dropped its years-long investigation of former Countrywide CEO Angelo Mozilo, whom the government was seeking to hold responsible for the financial crisis.
“Why weren't there any executives prosecuted following the massive fraud foisted upon the American people in the run-up to 2008?” Pascrell said this week. “The FBI's response to the financial crisis can teach us how to approach such disasters as lawmakers, but it can also shine light on a situation that citizens are still feeling the negative effects of. “If we're reviewing FBI files, let's review something that could be useful in avoiding another Wall Street meltdown.”
Pascrell requested the FBI release files related to its investigations related to the crisis, including witness interview transcripts, notes, reports, and memoranda produced throughout the investigation.
Click here to view Pascrell’s letter.