This article summarized the Inspector General's Report on how the Justice Department performed in detecting and punishing the perpetrators of mortgage fraud. The good news is that Inspector General did the job that we should expect. The bad news is the Justice Department boasted about its performance by presenting inaccurate information to the public about its success. It also wasted $196 million that was provided to the FBI to detect and prosecute those who committed mortgage fraud. The Inspector General found that, despite being granted more funding to battle mortgage fraud, the number of agents assigned to mortgage fraud declined, and the number of pending investigations declined between 2009 and 2011.
Few will be surprised by this report. The financial crisis would not have occurred without widespread mortgage fraud which enabled mortgage originators to earn large fees by passing on fraudulent mortgages to investment banks which packaged them into securities which they fraudulently misrepresented to their customers. This was probably the largest instance of criminal fraud in history. The Justice Department did not do its job. It was more concerned about potential damage to the banks and bankers than it was to the pursuit of justice.