Holder eyes white-collar crime

Attorney General Eric H. Holder Jr. on Thursday told a panel studying the financial crisis that combating white-collar crime is “a real priority” for the government, even if it bumps up against another urgent mission, combating terrorism.

Mr. Holder told the bipartisan Financial Crisis Inquiry Commission that the FBI is investigating more than 2,800 mortgage fraud cases, up almost 400 percent from five years ago, and that he hopes to have 50 new FBI agents and 155 new attorneys working financial-crimes cases in the coming year.

Still, Mr. Holder said, “our resources, even given those additions, are relatively limited, and these cases are complex ones. They take time and money in order to bring to fruition.”

Commission Chairman Phil Angelides asked Mr. Holder if the diversion of 500 investigators from financial crimes to terrorist activities since the Sept. 11, 2001, attacks and recent terrorism threats makes it harder for the Justice Department to investigate financial crimes.

Mr. Holder said moving investigative resources to national security is understandable and suggested that the need to expand terrorism-related investigations wasn’t stopping the Justice Department from making “fighting white-collar crime a real priority.” He cited the conviction of Bernard L. Madoff for running a giant Ponzi scheme and the arrests of wealthy hedge fund operator Raj Rajaratnam and a co-defendant on charges that they were major players in a vast insider-trading ring.

Mr. Angelides, a Democrat and former California state treasurer, grilled Mr. Holder on a Sept. 4, 2004, warning from a top FBI official about “an epidemic of mortgage fraud coursing across this country” and the dire crisis that could occur if it were left unchecked. That was four years before the financial meltdown on Wall Street that led to the collapse of some of the nation’s largest financial institutions and to unprecedented government bailouts for the survivors.

Mr. Holder said he wasn’t aware of the warning but would check into it.

“We are constantly in the process of reviewing that which we can do better,” he said. “When we find businesses or individuals whose disregard for the law has hurt the pocketbooks of average Americans, we will use every available measure to hold them accountable.”

Mr. Holder and top financial regulators testified on the second day of hearings by the 10-member bipartisan panel set up by Congress to investigate the causes of the financial meltdown.

Securities and Exchange Commission Chairman Mary Schapiro and Federal Deposit Insurance Corp. Chairman Sheila Bair told the panel they were also beefing up enforcement of financial abuses and called for more regulatory reform.

The panel also heard from state regulators. Illinois Attorney General Lisa Madigan, an aggressive prosecutor of mortgage fraud, said that the pre-crisis mortgage system profited everyone except homeowners. She cited a “failure of federal regulatory oversight.”

“We are the front lines. We get those consumer complaints,” she said.