Wall Steet Fraud + No Accountability = Financial Crisis

FBI resources limited for economic probes
Reuters News Service - October 18, 2008

NEW YORK (Reuters) – The FBI, after years spent focusing on national security, is struggling to find agents and resources to investigate wrongdoing tied to the country's economic crisis, The New York Times reported in Sunday editions. Citing current and former FBI officials, the Times said cutbacks in its criminal investigative workforce following the September 11 attacks left the FBI weaker in areas like white collar crime. The cutbacks were the result of a shift in focus to terrorism and intelligence matters. More than 1,800 agents, or nearly one-third of all those in criminal programs, moved into those areas, the Times said.

"Clearly, we have felt the effects of moving resources from criminal investigations to national security," the newspaper quoted FBI Assistant Director John Miller as saying. "In white collar crime, while we initiated fewer cases over all, we targeted the areas where we could have the biggest impact. We focused on multimillion-dollar corporate fraud, where we could make arrests but also recover money for the fraud victims." While the FBI plans to double the number of agents working on financial crimes, people within and outside the Justice Department question where the agents will come from and whether that will suffice, the Times said.

Records and interviews show that FBI officials have warned of a looming mortgage threat since 2004, and asked the Bush administration to fund such nonterrorism investigations, but the requests were denied and no new agents were approved for financial criminal investigation work, the newspaper said. Internal FBI data shows the cutbacks were especially sharp in areas of white collar crime like mortgage fraud, with more than 600 agents lost, or more than one-third of 2001 levels. According to Justice Department data, fraud prosecutions directed at financial institutions dropped by nearly one-half from 2000 to 2007, insurance fraud cases fell 75 percent and securities fraud decreased by 17 percent, the Times said.

"The administration's top priority since the 9/11 attacks has been counterterrorism," Justice Department spokesman Peter Carr told the paper. "In part, that's reflected by a significant investment of resources at the FBI to answer the call from Congress and the American public to become a domestic intelligence agency, in addition to a law enforcement agency." According to the Times, several former law enforcement officials said that senior administration officials, notably those at the White House and the Treasury Department, made clear that they were concerned the Justice Department and the FBI were taking an anti-business attitude that could inhibit corporate risk-taking. One former official said some in the administration characterized aggressive corporate prosecutions as "over-deterrence." (Reporting by Chris Michaud)