Former California Treasurer Phil Angelides, who chaired the Financial… (Jay L. Clendenin / Los Angeles…)
WASHINGTON — Phil Angelides, who chaired the government commission that investigated the financial crisis, said the Justice Department should pursue more criminal cases against Wall Street executives to restore the faith of average Americans in U.S. markets.
"Restoring that faith will require bringing a renewed sense of urgency to the mortgage securities fraud investigation, and a willingness to follow the evidence wherever it leads — even to criminal prosecutions of bank executives and mortgage lenders of any size," Angelides, the former California state treasurer, wrote in an opinion article Tuesday in Politico.
"Americans need to know that law breaking at the highest levels will not be countenanced or allowed to jeopardize our financial system and economy," he said.
Angelides was chairman of the Financial Crisis Inquiry Commission, which issued a report in early 2011 that found widespread blame for the crisis, including homeowners who overextended themselves, bank executives that took huge risks and federal regulators who failed to rein them in.
But nearly four years since the crisis, and about seven months since the Obama administration launched a special working group to investigate mortgage securities fraud, there have been no major criminal prosecutions.
Angelides compared the investigative response to this financial crisis to that of the savings-and-loan scandal in the late 1980s and early 1990s.
He noted that the wide-ranging probe into that banking crisis, which he described as a much smaller and less complex scandal than the near financial meltdown of 2008, led to the felony convictions of more than 1,000 bank and thrift executives.
The Justice Department must dedicate more resources to the investigation of mortgage securities fraud and should focus on criminal prosecutions as well as civil ones, he said.
"Deterring future crimes can’t be accomplished simply through fines or negotiated financial settlements — which many banks regard as the cost of doing business," Angelides said. "Senior executives need to know that if they violate the law, there will be real consequences."
The recent investigation by U.S. and British authorities into allegations that major banks rigged a key international lending benchmark, the London InterBank Offered Rate, or Libor, has been an example of the Obama administration showing its teeth to financial executives.
The question now is whether the mortgage securities fraud investigation, headed by Atty. Gen. Eric Holder and New York Atty. Gen. Eric T. Schneiderman, will produce results.
At this point, Angelides said, "the jury is still out on whether the investigation will bring Wall Street CEOs to justice and deter future wrongdoing."
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