SCHUMER, SHELBY ANNOUNCE NEW LEGISLATION TO CRACK DOWN ON WALL STREET FRAUDSTERS
Amid Rise In Financial Fraud Cases That Have Cost Investors Billions, Senators Say White-Collar Crime Units At Federal Law Enforcement Agencies Need Beefing Up--FBI's White-Collar Units Are Down 625 Agents Since 9/11
Schumer-Shelby Proposal Would Provide $110M To Hire 500 New FBI Agents, 50 New Assistant U.S. Attorneys and 100 New SEC Enforcement Officials
WASHINGTON, DC - U.S. Senators Charles E. Schumer (D-NY) and Richard Shelby (R-AL) announced Thursday that they have introduced bipartisan legislation that would add hundreds of new investigators and prosecutors to the financial fraud units at the nation's top law enforcement agencies in order to expose and punish white-collar crimes that have contributed to the ongoing fiscal crisis.
Schumer and Shelby's bill, known as the Supplemental Anti-Fraud Enforcement ("SAFE") Markets Act, would dedicate an additional $110 million annually for these new hires. The senators said they would seek to pass the additional funding at the earliest possible opportunity.
"Our white collar crime divisions are under-staffed, under-funded, and overwhelmed," Schumer said. "When a wave of violent crime sweeps through a city, the immediate response is to beef up the police forces, putting more cops on the beat, extending overtime, and making sure the city returns to safety. Our reaction to the financial crisis and the massive and complex financial fraud investigations that loom should be no different."
"Fundamentally, our current economic crisis is one of confidence, which underpins our entire financial system. This foundation of trust has been badly shaken by greed, but is further eroded by fraud. In order to restore confidence, those who perpetrate fraudulent acts must be brought to justice. The legislation Senator Schumer and I are introducing today will help ensure that law enforcement agencies have the resources they need to investigate and prosecute these crimes," Senator Shelby said.
In recent months, amid the financial crisis that has roiled the U.S. economy, a rising number of securities and accounting fraud cases have surfaced, accounting for billions of dollars in losses for investors. But the agencies on the front lines of policing the Wall Street's top financial institutions and investment managers have been hamstrung by a lack of resources. Since September 11, 2001, when the nation's law enforcement priorities understandably shifted to counterterrorism efforts, the ranks of personnel at white-collar crime units have declined sharply. By some published estimates, the Bush administration failed to replace at least 2,400 FBI agents who were transferred to counterterrorism squads. As a result, the FBI's white collar units are currently down at least 625 agents from pre-9/11 levels, a reduction of 36 percent.
Many United States Attorneys' offices throughout the country have been subjected to hiring and budget freezes. The number of new Assistant United States Attorneys has grown by around .5% each year during recent years. But new hires have been allocated to prosecuting internet crime, immigration offenses, and gangs - important areas, to be sure, but none more emergent than financial fraud during our current crisis. As a result, from 2000-2007, the number of prosecutions of frauds against financial institutions plummeted by 48 percent.
After the savings and loan debacle of 20 years ago, Congress authorized $75 million to hire more FBI agents and prosecutors. The law enforcement effort resulted in more than 600 convictions and $130 million in ordered restitution. Schumer and Shelby's bill similarly seeks to provide extra resources to meet the added strain put on these law enforcement agencies. The $110 million authorized by the senators' proposal would allow for new hires at each of three different law enforcement offices, as listed below:
-- 500 new FBI agents ($80 million)
-- 50 new Assistant United States Attorneys ($10 million)
-- 100 new SEC enforcement division employees ($20 million)
The senators said Thursday that the investment in enforcement is a small price to pay to protect U.S. markets, and it could pay for itself. An increase in fines levied by the SEC and collection of orders of restitution in criminal cases could be far greater than the $110 million cost of increasing enforcement personnel.