In the wake of the highly publicized scandal and alleged Ponzi scheme involving Bernie Madoff, U.S. lawmakers announced a proposed bill that would provide for an additional $110 million, 50 FBI agents, 100 SEC Enforcement Officials and 50 Assistant U.S. Attorneys to deal with federal securities fraud cases. The bill is called the Supplemental Anti-Fraud Enforcement Markets Act (“SAFE Markets Act”).
It is interesting how reactive our lawmakers and law enforcers are to major stories and so-called trends in criminal law. Not long ago, I wrote a post about how federal law enforcement authorities were prosecuting fewer white collar crimes and allocating their resources more towards immigration and terrorist-related issues. This was a reaction not only to 9/11 but also to the fact that illegal immigrants were coming over the border in droves to take advantage of the thriving U.S. economy and the numerous jobs made available by companies looking for cheap labor. At the time I wrote that post in May of 2008, prosecution of all federal white collar crimes was down 27% since President Bush took over in 2000.
More recently, the federal government’s focus shifted to mortgage fraud cases. The economy, and in particular, the housing markets, crashed, and several things happened. Immigration was still a concern, but those jobs that enticed illegal immigrants dried up to a large degree. Falling housing prices, untenable mortgages that were no longer supported by housing values and foreclosures captured the headlines. As a result, federal law enforcement officials increased their efforts to address mortgage fraud cases. As of late 2008, federal mortgage fraud cases more than doubled over the prior few years.
Now, with hourly reports about the demise of the financial industry and the credit markets, the spectacular Madoff scandal and securities that were once highly valued now reduced to mere dollars a share, the federal government is on the move again and the target is securities fraud.
What does this say about the government’s ability to keep up with people committing various federal crimes? Perhaps the federal government is susceptible to influence and suggestion from the media just like so many other consumers of the news outlets and more than we would expect.