Federal prosecutions fof certain financial crimes has reached a 20-year low, according to a new report from the Transactional Records Access Clearinghouse (TRAC) at Syracuse University.
The report found that the federal government is on track to file just 1,365 prosecutions for financial institution fraud in fiscal year 2011. That would be the lowest number of prosecutions in at least 20 years
The report comes at a time when the larger segments of the public have registered complaints about close ties between large banks (“too-big-to-fail”), credit card companies and federal regulators (the SEC and CFTC).
The falling number of fraud prosecutions is exceptional because of the strong evidence of financial-sector misconduct over the past 20 years.
This period includes fraudulent trading practices by hedge funds, fraudulent practices in the real estate and housing industries caused by rampant mortgage fraud and improper foreclosure. The use of toxic mortgages in structured products (commonly included in Collateralized Mortgage Obligations) is cited as a main reason behind the weakening of the national and global economy.
The TRAC report, which compiles Justice Department data obtained through the Freedom of Information Act, noted that 2011’s low number of financial fraud prosecutions contuinues a pattern which began over the last decade.
Every year since 1999, the number of federal prosecutions has decreased, the report states. There were more prosecutions in any given year during the administraion of George W. Bush than in any year during the Barack Obama presidency, under the lead of the Justice Department’s Eric Holder and SEC Chairwoman Mary Schapiro, the report found.