Since the mortgage meltdown and the onset of the economic crisis, the federal government has poured trillions of dollars into the support of the financial services industry. Regardless of whether the money I n was provided to banks directly or whether it was used to support relief efforts to help borrowers, U.S. taxpayers are footing the bill for many of the losses that were incurred as a result of risky loan programs and mortgage securities, and the ensuing collapse of housing values. If As is the case whenever there is a large federal program backed by hundreds of millions of dollars, the bailout programs supporting individual borrowers are tempting targets to those who seek to make a quick and illicit buck. * Because there are millions of troubled and underwater borrowers, and hundreds if not thousands--of lenders and servicers involved in the administration of these programs, there are plenty of opportunities for fraud to flourish. Among the primary defenses against financial marauders are the inspectors general (IGs) for the various agencies and departments involved in dispensing federal funds. * Congress passed legislation commonly referred to as the Inspector General Act of 1978. The law created the position of inspector general for the U.S. Departments of Agriculture, Commerce., Housing and Urban Development (HUD), Interior, Labor and Transportation, as well as for the Department of Health and Human Services' Office of Community Services, Environmental Protection Agency (EPA), General Services Administration (GSA), National Aeronautics and Space Administration (NASA), Small Business Administration (SBA) and Department of Veterans Affairs (VA).
The Inspector General Act charged the IGs with con ducting and supervising audits and investigations relating to the programs and operations of their respective entities, to recommend policies and procedures to promote economy, efficiency and effectiveness in the administration of such programs and operations; and with the duty to keep the various directors and Congress fully and currently informed about problems and deficiencies in the administration of such programs and operations and the necessity for and progress of corrective actions.
Although no one in 1978 could have predicted exactly the circumstances we now find ourselves in, it is clear that the inspectors general and their Offices of Investigation (0Is) exist in large part to protect taxpayers from fraud and abuse within the system and in government programs.
In recent years, a great deal of attention has been paid lo deterring fraud in the financial services industry and in mortgage lending. One of the more well-known efforts is the interagency Financial Fraud Enforcement Task Force (FFETF) established by President Barack Obama in 2011 to investigate and prosecute financial crimes through an aggressive, coordinated and proactive effort.
Members of this task force include representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law-enforcement agencies. Together, this group provides a powerful array of criminal and civil enforcement resources to investigate and prosecute significant financial crimes; ensure just and effective punishment for those who perpetrate financial crimes; combat discrimi nation in the lending and financial markets; and recover proceeds for victims of financial crimes.
More recently, in his January 2012 State of the Union address, President Obama announced the formation of the Residential Mortgage-Backed Securities Working Group (RMBSWG) within the FFETF, which is charged with investigating securities-related frauds.
Given the attention the feds are paying to improprieties in the mortgage funding space, it seemed like a good time to take a look at what the inspectors general are working on and how they have teamed up to fight fraud together. …