WASHINGTON -- Lost in Monday's analysis of President Barack Obama’s budget-cuts blueprint for fiscal 2012 was a noteworthy increase in the funding requested for the prosecution of various forms of financial fraud.
Tucked into the request for Department of Justice funds ahead is a 14.8-percent increase, to $677.8 million, in the proposed funding for DOJ's financial fraud task force. Established in fiscal 2010 at a baseline of $591.5 million, the fraud unit's funding dropped slightly to $590.1 million during the continuing resolution that currently funds the government in lieu of a formal budget. The money would pay for functions undertaken by the FBI, U.S. attorneys, U.S. trustees, and the department's criminal, civil, antitrust and civil rights divisions -- all of which have played a role in cracking down on fraud, from the financial sector to mortgage practices.
Given the broad cuts elsewhere in Obama's budget proposal, the bump to DOJ suggests a renewed push to punish financial fraud, which the White House thus far been slow to attack. While the administration has pursued malfeasance by small players and even some major hedge funds, it has largely ignored allegations of abuse leveled against the nation's largest banks.
Last month, however, the bipartisan panel appointed by Congress to investigate the financial crisis referred for prosecution several cases in which it concluded financial industry figures appeared to have broken the law. A DOJ official said the budget request could be interpreted as a sign of greater action to come.
“We have been working on this,” the official said. ‘It is obviously a priority. There is an interagency task force that we are putting a lot more resources to.”
That said, the resources -- not to mention the political will -- needed to undertake major cases against some of the top banks likely surpass the monetary requests in Obama's budget proposal.
(Disclosure: Stein's wife works for the Department of Justice.)