Tester demands more accountability from nation’s top law enforcers
Senator calls for ‘exhaustive’ public investigations of crime in financial industry
(BIG SANDY, Mont.) – Angered by news that the FBI is struggling to find enough agents to investigate crimes linked to the nation’s financial crisis, Senator Jon Tester today told the nation’s top law enforcers that Montanans demand more accountability to “make sure no white collar crime goes unpunished.”
“Thousands of Montanans have told me over these past few weeks that we need to find the criminals who brought us into this situation and send them to their 8 by 10 cells,” Tester wrote in letters to U.S. Attorney General Michael Mukasey and Securities and Exchange Commission Chairman Christopher Cox.
Analysts have suggested the U.S. economy tanked in recent weeks due to white collar crime, greed and lack of regulation in the financial industry.
A story in the New York Times Sunday said the FBI warned the Bush Administration about the “looming threat” of mortgage fraud back in 2004. But the number of agents investigating white collar crime has fallen 36 percent since 2001.
Tester sounded an alarm after the government’s first multibillion dollar bailout earlier this year, after the Bush Administration put up $29 billion to keep investment bank Bear Stearns afloat. Tester asked the Justice Department to investigate whether insider trading led to the collapse of Bear Stearns, but no direct investigations have been announced.
“Now we’re talking about numbers that are staggering—even for Washington, D.C.,” Tester said, referring to the government’s recent $700 billion bailout of the financial industry. Tester was one of 24 U.S. Senators who voted against the bailout.
Tester today said with nearly a trillion dollars on the line, “standard operating procedure will no longer suffice.” Tester told Mukasey and Cox they need to “conduct exhaustive investigations,” and to make the investigations public.
“These are extraordinary times and we need more than ordinary investigations,” Tester wrote. “The ramifications of these economic conditions are not limited to stock brokers and large corporations; people in small towns across the country are hurting and worry about their future.”
Tester is a member of the Senate Banking Committee. His letter to Mukasey and Cox follows.
The Honorable Michael B. Mukasey
The Attorney General
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, D.C. 20530
The Honorable Christopher Cox
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549
Dear Attorney General Mukasey and Chairman Cox:
In the recent weeks and months, America has experienced economic difficulties more severe than at any time since the Great Depression. The stock market has lost trillions of dollars, stalwart companies have gone into bankruptcy, retirement accounts have been threatened and the government has been forced to play an expensive and dangerous role to ensure the entire system does not collapse. The ramifications of these economic conditions are not limited to stock brokers and large corporations; people in small towns across the country are hurting and worry about their future.
While we cope with the fallout of the economic situation and plan on how to move forward, it is imperative that we do not ignore what brought us to this point. The actions of some may very well cause dire consequences for the entire nation. It is now up to the Securities and Exchange Commission (SEC) and Department of Justice (DOJ) to conduct exhaustive investigations into any and all illegal activities that may have played a minor or major role in this catastrophe.
I understand that you are utilizing exiting authority to investigate fraud, insider trading, market manipulation and any other abuses that may be within your broad purview. However, I am asking you to go farther. These crimes are anything but ordinary and the American public is now on the hook for nearly a trillion dollars to failing financial institutions. Standard operating procedure will no longer suffice.
On April 10, 2008, I wrote you to ask that, “the Securities and Exchange Commission and Department of Justice immediately and thoroughly investigate the role that short selling played in the events surrounding Bear Stearns.” I wrote further that, “the American taxpayers are now saddled with a risky $29 billion position as part of the Bear Stearns-JP Morgan Chase merger, thousands of workers will soon be facing unemployment and the Federal Reserve took a nearly unprecedented position entering itself into the private marketplace by financially backing the purchase of an investment bank. These are not normal times and require the investigative arm of the United States government to respond with appropriate action.”
To date no direct investigations have been announced despite my and many others’ frequent attempts to spur your agencies to be more public with your investigations. And we are well beyond a $29 billion loan at this point.
On October 16, 2008, former Chairman of the SEC, Arthur Leavitt told the Senate Banking Committee in written testimony, “Enforcement is so important not because the SEC can catch every cheat and prevent every abuse. It’s important because it holds people accountable and serves as a powerful deterrent to bad behavior—and is the most powerful tool a regulator has to keep a market functioning. Indeed, the signals the SEC can send to investors are critical. By bringing a tough enforcement action, making a well-timed public statement, or taking action on a critical need, the SEC builds the investors’ confidence that someone is looking out for them which, in turn, builds market trust. Yet at critical moments and on critical issues, the SEC has been reactive at best or has shown no real willingness to stand up for investors.”
Thousands of Montanans have told me over these past few weeks that we need to find the criminals who brought us into this situation and send them to their 8×10 cells. They demand accountability to make sure no white collar crime goes unpunished. I agree with them, though I know it will take time and a thorough investigation by your agencies. With nearly a trillion dollars of loans given to many of these financial companies, publicizing your investigations may go along way to easing the concerns of the creditors who saved these companies from ruin—the American taxpayers.
I also urge you to report to Congress with the additional regulatory tools your agencies need to regulate and investigate these industries. We will be taking a comprehensive view of the regulatory architecture of the banking and financial sectors in the coming months. And I believe we should prioritize giving updated powers to the law enforcement arms responsible for investigating criminal authority to better oversee the evolving markets. It is imperative that you inform the relevant congressional committees of the necessary tools and improvements to adequately investigate and prosecute illegal actions.
These are extraordinary times and we need more than ordinary investigations. I look forward to your prompt and thorough response.