New York Attorney General Eric T. Schneiderman, U.S. Attorney General Eric H. Holder, Housing and Urban Development (HUD) Secretary Shaun Donovan, and Securities and Exchange Commission (SEC) Director of Enforcement Robert Khuzami today detailed the core mission of the new Residential Mortgage-Backed Securities Working Group announced by President Obama in the State of the Union address. This collaboration brings together the Department of Justice (DOJ), several state law enforcement officials – led by Attorney General Schneiderman - and other federal entities to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. It builds upon ongoing state and federal investigations, while also launching new ones.
The goals of this joint investigation will be to:
- Hold accountable any institutions that violated the law;
- Compensate victims and help provide relief for homeowners struggling from the collapse of the housing market, caused in part by this wrongdoing; and
- To help us finally turn the page on this destructive period in our nation’s history.
“I would like to thank President Obama and Attorney General Holder for launching this comprehensive investigation, and I look forward to co-chairing this effort that marshals state and federal resources to bring justice for the victims of the misconduct that caused the mortgage crisis,” said Attorney General Schneiderman. “In coordination with our federal partners, our office will continue its steadfast commitment to holding those responsible for the mortgage crisis accountable, providing meaningful relief for homeowners commensurate with the scale of the misconduct, and getting our economy moving again. The American people deserve nothing less than a thorough investigation into the global financial meltdown to ensure nothing like it ever happens again, and this effort is a major step in the right direction.”
Attorney General Schneiderman and Attorney General Holder announced that the new working group will include 55 Department of Justice attorneys, analysts, agents and investigators. As it begins its work, 15 attorneys – civil and criminal – and 10 FBI agents and analysts will be initially assigned to the working group. An additional 30 attorneys, investigators and other staff from U.S. Attorney’s Offices around the country will join the working group’s efforts, in addition to existing state and federal investigations into similar misconduct under those authorities.
“This Working Group brings together federal and state partners to strengthen current and future efforts to investigate and prosecute instances of wrongdoing in the residential mortgage-backed securities market,” said Attorney General Holder. “With this focus on collaboration – and by bringing our government’s full enforcement resources to bear – I have no doubt that we will improve our ability to recover losses, to prevent fraud, to bring abuses to light, and to hold those who violate the law accountable: That’s what the challenge before us demands, and that’s what the American people deserve.”
In addition to Attorney General Schneiderman, the working group will be Co-Chaired by leading officials at the Department of Justice and SEC, including Lanny Breuer, Assistant Attorney General, Criminal Division, DOJ; Robert Khuzami, Director of Enforcement, SEC; John Walsh, U.S. Attorney, District of Colorado; Tony West, Assistant Attorney General, Civil Division, DOJ.
“I am pleased to Co-Chair this important effort. Each of us offer different tools and talents, but we are all united by a common and continuing desire to identify misconduct in the mortgage securitization process,” said SEC Enforcement Director Khuzami. “The SEC has issued scores of subpoenas, obtained millions of documents, and interviewed dozens and dozens of key witnesses related to mortgage backed securities. This collaborative effort will enable us pool our knowledge and leverage our resources.”
“Millions of American families have been harmed by the foreclosure crisis,” said HUD Secretary Donovan. “These families deserve justice. They deserve relief. That is why this investigation is so important. With a new Residential Mortgage-Backed Securities Working Group led by Attorney General Holder and state leaders like New York Attorney General Schneiderman, we will build on the work of the President’s Financial Fraud Enforcement Task Force by investigating misconduct we know led directly to the financial crisis. And I’m proud that the Office of the HUD Inspector General David Montoya —which over the past year has been central to uncovering wrongdoing with respect to faulty foreclosure servicing practices—will play a critical role in the mortgage origination component of this review.”
Attorney General Schneiderman has made it a top priority of his administration to hold accountable those whose misconduct led to the collapse of the housing market– and to provide significant relief to homeowners. In the State of New York, an average of 1 in 10 mortgages is at risk of foreclosure. The approximate number of individuals living in homes that are either in foreclosure or at risk of foreclosure (based on typical household size for each distressed mortgage) exceeds the populations of Buffalo, Rochester, and Syracuse combined.
Learn more about the Residential Mortgage-Backed Securities Working Group and the Financial Fraud Enforcement Task Force at: www.stopfraud.gov
