Obama targets financial fraud

The Obama administration announced Tuesday the formation of an interagency task force aimed at preventing and prosecuting financial crimes.

The so-called Financial Fraud Task Force replaces the Corporate Fraud Task Force, which was formed in 2002 in response to financial scandals earlier this decade.

“Mortgage, securities, and corporate fraud schemes have eroded the public’s confidence in the nation’s financial markets and have led to a growing sentiment that Wall Street does not play by the same rules as Main Street,” Attorney General Eric H. Holder Jr. said during a news conference. “Unscrupulous executives, Ponzi scheme operators, and common criminals alike have targeted the pocketbooks and retirement accounts of middle-class Americans, and in many cases, devastated entire families’ futures.”

Mr. Holder said the new task force, which was formed through an executive order from President Obama, has a broader “scope,” as it will include greater involvement from state authorities than the task force’s previous incarnation.

“The problem we face, I think, is actually in some ways broader than that which was faced by the previous task force,” Mr. Holder said. “And that is why this effort has - is larger in scope.”

The Justice Department will lead the task force, which includes the Treasury Department, Securities and Exchange Commission and nearly two dozen other federal agencies.

The first meeting of the task force is expected during the next 30 days.

Its formation comes as the federal government faces continued criticism for applying too little oversight and enforcement in the run-up to the financial meltdown.

Treasury Secretary Timothy F. Geithner called for greater enforcement, but also said it is critical that Congress persists in giving the government more tools for improved oversight.

“We can’t wait for problems to peak before we respond,” he said. “Too often in the past, even with enormously dedicated people working very hard at the federal and state level, enforcement resources were not mobilized on a major scale until extensive damage had already been done.”

While Mr. Holder trumpeted the Justice Department’s and FBI’s staffing increases to deal with financial fraud and the thousands of open investigations ongoing, he acknowledged that the announcement came a week after the acquittal of two former Bear Stearns executives on fraud charges.

“Obviously, we respect the verdict that was returned in those cases and, you know, we analyze cases like that and learn from them. And that analysis is under way,” he said. “We’ll try to determine exactly why we were not successful there and determine what mistakes might have been made and so we don’t repeat those in the future.”