More than three years after the U.S. housing market nearly collapsed as a result of reckless lending practices, the Justice Department says it plans to create a new Financial Crimes Unit to investigate mortgage abuses. Great timing, no?
President Barack Obama announced the plans for the new unit this week, as regulators worked on the final details of a settlement agreement with five major banks over foreclosure abuses. The supposed settlement comes more than a year after state and federal regulators started investigating the robosigning scandal. A $25 billion potential settlement would release the servicers from further liability, according to various reports released in the last two weeks. If that is the case, what's the purpose of a fraud unit investigating lenders that can no longer be punished for their wrongdoings?
And why did it take the government and our "justice" system more than three years to come up with the brilliant idea that maybe we need a special unit to investigate the mess that nearly destroyed our economy?
Some analysts say the new unit could jeopardize the settlement that is in the works. Others say it may be part of the actual settlement, meaning the servicers would only be granted partial release of liability.
The new unit will focus on the origination and securitization of mortgage loans. It will have a staff of about 55 people, including FBI agents.
This effort would have sounded great if it had happened three years ago. Hopefully, it won't take another three years before we hear the results of the investigations conducted by the new unit.
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