The U.S. Department of Justice under President Barack Obama is prosecuting fewer banks for fraud than it did under George W. Bush.

 

To date, the Justice Department, during the first eleven months of fiscal year 2011, has reported 1,251 new prosecutions for financial fraud. At this pace federal prosecutors will file 1,365 such cases by the end of FY 2011—a total that would represent a 28.6% drop from five years ago.

 

Prosecutions for bank fraud peaked in 1999 when more than 3,000 cases were filed by the Justice Department of Bill Clinton, and have declined steadily ever since.

 

Jeffrey Connaughton, former chief of staff to U.S. Senator Ted Kaufman (D-Delaware), who chaired the Congressional Oversight Panel of the Troubled Assets Relief Program (TARP) during 2010-2011, told the Huffington Post that “a big part of the reason” for this situation is that “lawyers and accountants are failing in their role as gatekeepers, and the Justice Department is too often deferring to these lawyers and accountants, which is like outsourcing the interpretation of the fraud laws.”

 

On August 28, 2008, the Justice Department issued new guidelines for prosecuting corporate crime that encouraged companies to pursue their own investigations and increased the use of non-prosecution and deferred prosecution agreements.

-Noel Brinkerhoff

 

Criminal Prosecutions for Financial Institution Fraud Continue to Fall (TRAC)

Federal Prosecution of Financial Fraud Falls to 20-Year Low, New Report Shows (by Alexander Eichler, Huffington Post)

As Wall St. Polices Itself, Prosecutors Use Softer Approach (by Gretchen Morgenson and Louise Story, New York Times)