The Islamic Post Blog


Economic Crisis Calls for Focus on Mortgage Lending Companies by ipinfo2
December 8, 2012, 12:27 am
Filed under: 2009 June Vol. 1, Business/Economy

June Vol. 1, 2009

 

 

 

 

By Subhana A. Rahim

While recession woes and the economic crisis in the United States are at their greatest peak since the Great Depression, the need to find the source of America’s financial catastrophe and create preventative measures have become a necessity. The Senate responded to this need recently by adopting the Fraud Enforcement and Recovery Act of 2009 (FERA). This Act, which was introduced by Senator Patrick Leahy (D-VT) and Senator Chuck Grassley (R-Iowa), broadens the scope by which the government can investigate and prosecute financial institutions in the mortgage lending business. Previous statutes generally impose sentences and fines for infractions relating to conventional banks and financial institutions. This most recent legislation widens the range of financial institutions that are affected, by specifically including mortgage lending companies. It also imposes stiffer penalties and fines for mail and wire fraud associated with financial institutions. One component of the act calls for a bipartisan Financial Markets Commission, whose mission will be to examine the economic crisis from both international and domestic aspectsand will have full subpoena powers as well.
While proponents for this endeavor claim that this well- honed legislation leaves no stone unturned in terms of prosecution, critics of this Act argue that portions of FERA are redundant, overreaching and highly unnecessary as there are laws that are already in place that address the specific infractions mentioned in the amendments. For example, the verbiage regarding “bribery” and “false statements” are already potentially punishable by hefty fines and extended jail terms of up to $1 million and 30 years respectively. Detractors are also concerned with the high costs that the government will incur for holding lengthy commissions thereby eating away at taxpayers’ money. The House of Representatives’ legislation is expected to mimic that of the Senate’s regarding the establishment of the commission.

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