The Year in Fraud: Looking Back on 2010
January 2011
IN THIS ISSUE
— Robo-Signings, Financial Reform and Other Fraud Stories of 2010
— Looking Into the Crystal Ball of Fraud for 2011
GREETINGS!
Welcome to the January edition of our newsletter! In this issue, as we begin a new year, we’ll look back on some of the more significant fraud-related stories of 2010 and look ahead to what may be on the horizon in 2011.
ROBO-SIGNINGS, FINANCIAL REFORM AND OTHER FRAUD STORIES OF 2010
2010 saw a series of efforts by government agencies to “toughen up”, at least on the surface, and strengthen anti-fraud efforts after the financial collapse of 2007-2008, including the creation of a Consumer Finance Protection Agency that, as of this writing, is still taking shape; and the passage of the so-called “Dodd-Frank” financial reform bill.
These efforts were coupled by enforcement impotency on other fronts: by May 2010, for instance, not one of the top executives at banks deemed “too big to fail” had been the subject for a criminal referral to the U.S. Justice Department for their part in precipitating the financial collapse. While several members of Congress have called for a coordinated effort to investigate the practice by banks of “robo-signing” foreclosure documents in an expedited manner, to date no such task force has materialized, although the National Association of Attorneys General has established a task force of attorneys general and banking regulators that is looking into the issue.
LOOKING INTO THE CRYSTAL BALL OF FRAUD FOR 2011
While enforcement efforts in Washington are likely to center on politically sensitive issues — such as immigration reform, in the wake of the failure to pass the DREAM Act, and potentially tax reform after the extension of current tax rates was signed into law — the effects of many policy and enforcement efforts remain to be seen. Will disclosure and record-keeping provisions in the new federal health care bill do anything to reduce fraud and abuse? How will the new consumer protection agency affect mortgage lending practices? Will large banks, who have already tightened their disclosure and income requirements for obtaining a loan, proceed even further in that direction?
One lesson that can be drawn from the scandal-ridden roller coaster of 2010 is that the only thing certain is that more uncertainty lies ahead. Whether considering a home purchase, selling a business, or any other complex transaction, the level of trust between parties remains near a historic low, and efforts to re-establish that trust in a systemic manner take time, if these efforts ever work at all. In the interim, the adage of “trust but verify” remains as true today as at any time in recent memory.