Obama creates new unit within financial fraud task force

During his State of the Union address last week, President Obama announced the creation of a new unit that will investigate financial institutions suspected of improperly bundling home loans into securities for investors, according to a New York Times story. Critics are skeptical, however, that it will be any more effective than previous efforts to aid the housing and financial crisis.

New York State Attorney General Eric T. Schneiderman will lead the new effort; it will function within the confines of the Financial Fraud Enforcement Task Force. Comprised of federal law enforcement and state attorney generals, the group will focus on Wall Street firms, big banks and other institutions that may have slipped through the cracks of initial inquiries.

The new unit’s mission will model similar state efforts in New York and Delaware. Those investigations center on mortgage-backed securities and potential flaws in their creation that could lead to charges of tax evasion, insurance fraud and securities fraud.

Opponents have pointed out that since its creation in 2009, the Financial Fraud Enforcement Task Force has demonstrated few actual results. The group also has the end of Obama’s term looming, leaving little time to achieve anything.

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