Obama announces a Wall Street crackdown

Obama announces a Wall Street crackdown

In his State of the Union address, Obama has announced a task force to go after the fraud that caused the financial crisis.

"We will…establish a Financial Crimes Unit of highly trained investigators to crack down on large-scale fraud and protect people's investments. Some financial firms violate major anti-fraud laws because there's no real penalty for being a repeat offender. That's bad for consumers, and it's bad for the vast majority of bankers and financial service professionals who do the right thing. So pass legislation that makes the penalties for fraud count. And tonight, I am asking my Attorney General to create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans."

The lack of prosecution of the bankers and financial engineers who caused the financial crisis is one of the great public frustrations with this administration. A New York Times analysis , nearly all of the biggest financial companies – Citigroup, Goldman Sachs, Morgan Stanley, JPMorgan Chase and Bank of America to name a few – have settled fraud cases by promising the SEC that they would never again violate an antifraud law, only to do it again in another case a few years later. In other words, they weren't prosecuted because they made a promise, and then they broke the promise.

We don't know where this will go. As The Wall Street Journal says, it's an unashamedly populist speech in an election year. Who know? Maybe, we'll see some big banks getting prosecuted in the lead up to the election. For Obama, it might be a winner.

Photo source DonkeyHotey


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