Monday, April 6, 2009

Treasury and Mortgage Fraud -- A New Focus

The U.S. Treasury Department issued a press release today concerning mortgage fraud -- "Federal, State Partners Announce Multi-Agency Crackdown Targeting Foreclosure Rescue Scams, Loan Modification Fraud." The focus on this is new for the enforcement staff at Main Treasury.

In the Bush Administration, after the enforcement mission and staff of Treasury was altered by the creation of the Department of Homeland Security, the chief interest of the relevant offices had been terrorist financing. One indication of this is the name of the umbrella office the Under Secretary in this area heads -- "Terrorism and Financial Intelligence." Interestingly, the Under Secretary is Stuart Levey, who was held over from the Bush Administration.

The Main Treasury staff reporting to Stuart Levey is small, if one excludes the Office of Foreign Assets Control, which is technically a Main Treasury office but given its size and mission is somewhat split off from the rest of Treasury. The key people under Levey have in the past been most concerned about terrorism and other national security issues, such as the proliferation of "weapons of mass destruction." They are undoubtedly still very focused on those issues, but that they are now making a public effort on mortgage fraud is reflective of how things have changed. No doubt, especially since the enforcement structure at Main Treasury is relatively new, these offices want to be perceived as relevant. We can all hope, though, that Treasury can contribute in this area through its own staff and through its bureau, the Financial Crimes Enforcement Network ("FinCEN").

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