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Public Statements

Wall Street and MF Global

Floor Speech

By:
Date:
Location: Washington, DC

BREAK IN TRANSCRIPT

Ms. KAPTUR. Mr. Speaker, numerous stories have come out over the last few weeks, all detailing the corruption and outright fraud on Wall Street.

First, there was the recent news about former Secretary of the Treasury Hank Paulson's inappropriately tipping off a few key friends from Goldman Sachs and other Wall Street tycoons about the impending collapse of Fannie Mae and Freddie Mac so that those friends could hedge and make money on that insider knowledge. Then a judge in New York threw out one of the orchestrated settlements between Citigroup, which was a bank at the center of the wrongdoing, and the Securities and Exchange Commission, which allowed that bank to walk away from cases of fraud without admitting any wrongdoing.

This past weekend, "60 Minutes'' interviewed a former executive vice president at Countrywide Financial, a giant and duplicitous player in the U.S. mortgage business. This woman was in charge of fraud investigations at the company before the financial crisis.

According to her, "Countrywide loan officers were forging and manipulating borrowers' income and asset statements to help them get loans they weren't qualified for and couldn't afford.'' She went on to say that all of the recycle bins, wherever they looked in that company, were full of signatures that had been cut off of one document and put onto another and then photocopied or faxed. According to her, the fraud she witnessed was systemic, taking place in Boston, Chicago, Miami, Detroit, Las Vegas, Phoenix, and elsewhere. She was fired before she could speak to government regulators about the extent of fraud she had documented.

What is most troubling is that these stories are not isolated. The FBI testified before Congress as early as 2004 that they were seeing an epidemic in white collar crime. They stated the FBI did not have anywhere near enough agents to investigate major white collar crime like the financial crisis. There are moments when I do wonder if the FBI has the will to prosecute; but still, today, the FBI has nowhere near enough special agents or forensic experts to properly investigate the level of corruption that we know occurred.

Frankly, the Congress has shorted the FBI--some might say purposely--of the resources it needs to do the job. I have a bill, which I invite my colleagues to support, H.R. 3050, the Financial Crisis Criminal Investigation Act, authorizing an additional 1,000 FBI agents to aggressively investigate the kind of fraud that has destroyed the economic future of millions of our people and that has upset the global financial system.

Back when we had the S&L crisis in the 1990s, we had 1,000 agents. Do you know how many were working when this financial crisis started? Forty-five. The others had all been reassigned to terrorism. We're only up a little over 200 agents now investigating white collar crime. Think about that, America. Why do you think these financial wrongdoers aren't in jail? Frankly, this Congress has not taken its responsibility to investigate seriously.

Despite the robust public reporting of misdeeds on Wall Street, it has not been until the MF Global case, one of the top 10 bankruptcies in this country, that Congress has shown some mild interest in the magnitude of the inquiry required. In November, we got an inside look into the stunning misdeeds--and let's be blunt--outright thievery that occurred at MF Global in the days before it declared bankruptcy. The total amount missing from private accounts has fluctuated over the weeks. As much as $1.2 billion could be missing from private customer accounts.

Congress is finally having hearings on this subject tomorrow, and we'll see how seriously an investigation is pursued. Let me say that the public has a right to know on what specific dates throughout 2011 money from customer accounts was wire-transferred in order to meet MF Global's margin calls.

This is the key question. Members should ask, probe, and exact the truth. The public has a right to know on what specific dates through 2011 was money from private customer accounts at MF wire-transferred in order to meet MF's global margin calls.

If Mr. Corzine authorized the taking of those funds, then this body should remind him that no one is above the law, not even someone who was a former Goldman Sachs CEO, former Governor and U.S. Senator. Whichever friends and associates aided his actions in that company should be brought into full sunlight, as well as other companies that were likely involved in those wire transfers.

The fact that hundreds of millions of dollars, if not over a billion dollars, can simply be stolen from a major banking institution from the inside requires full investigation, not just by the Congress, but by the FBI. I'm reminded of that book, written by Professor William Black, ``The Best Way To Rob a Bank is To Own One.'' Well, I wonder how much of that applies in this case.

It's time that Wall Street, white collar crimes, be prosecuted seriously, that this Congress do its job. Let's provide the FBI the resources it needs to fully investigate and prosecute, and the committees of this Chamber use their full authority to do no less. We surely owe this to the American people and the cause of justice toward all.


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