News and views from the award-winning author of the novels The Skinny Years, America Libre, House Divided and Pancho Land

Sunday, October 19, 2008

FBI is ill equipped to police the $700 billion bailout

With $700 billion in government money sloshing around financial markets, it's evident the potential for fraud will increase exponentially. However, the FBI's ability to police white collar crime is at an all time low. That's because the Bureau's main focus has been on national security since 2001. According to the New York Times, the FBI has seen prosecutions of frauds against financial institutions drop by 48 percent from 2000 to 2007. The Times also reported FBI prosecutions have been slashed  by 75 percent for insurance fraud along with 17 percent reduction in securities fraud cases during the same period. These are not great trends at a time when financial markets are receiving money by the ton from the federal government -- the proverbial poster child for waste and fraud.    

Few would blame the Bush administration for redirecting FBI resources from white collar crime to national security after 9-11. The Bureau switched nearly a third of its agents from financial fraud to anti-terrorist activities following the terrorist attacks. Still, the financial crisis clearly caught the Bush White House completely unprepared—again. Now there is a manic swing underway to bring FBI resources back into fraud prosecutions. Let’s hope the terrorists aren’t watching this too closely.

In the meantime, some have raised questions about the connection between the lack of FBI attention to fraud over the last six years and our current financial meltdown.  Some within the FBI even saw it coming. One senior FBI official warned of a mortgage fraud “epidemic” in 2004. But like the memo that alerted the Bush administration that terrorists planned to use passenger planes as bombs, the Bush team was too busy with its pre-ordained agenda to pay much attention. When a president publicly boasts that he doesn’t read newspapers, is it any wonder he would overlook information that seemed inconvenient?

As the Bush years wind down, even its one-time supporters are finally admitting what only a few said in the beginning. This is a White House blinded by hubris and obsessed by ideology; an administration whose only real talent was winning elections with cunning swift-boat campaigns that attacked an opponent’s character while skirting real issues. The legacy of electing someone who “seemed like a great guy to have a beer with” will live with this nation for much too long. 

Raul Ramos y Sanchez