WASHINGTON -- More than four years after the financial crisis, not a single Wall Street executive has been jailed for playing a role in the creation of the toxic financial products that fueled the real-estate bubble, which were in some cases designed simply to fail.
That track record may make it difficult for the Department of Justice to earn the sympathy of the public as it warns that spending cuts will hamper its ability to investigate Wall Street fraud. The Federal Bureau of Investigations told lawmakers in a recent letter that across-the-board cuts resulting from sequestration "will cause current financial crimes investigations to slow as workload is spread among a reduced workforce. In some instances, such delays could affect the timely interviews of witnesses and collection of evidence."
Investigations yet unseen may also be harmed. "In some instances, such delays could affect the timely interviews of witnesses and collection of evidence. The capacity to undertake new major investigations will be constrained," FBI Director Robert Mueller III wrote in the letter, addressed to Sen. Barbara Mikulski (D-Md.), the chair of the Senate Appropriations Committee.
The warning closed with the type of reasoning that critics of the lack of investigations would readily support. "Left unchecked, fraud and malfeasance in the financial, securities, and related industries could hurt the integrity of U.S. markets," Mueller offered. "In addition, the public will perceive the FBI as less capable of aggressively and actively investigating financial fraud and public corruption, which would undercut the deterrence that comes from strong enforcement."
During President Barack Obama's 2012 State of the Union address, he announced the formation of a task force to investigate Wall Street in a meaningful way. He decided not to mention the unit, which had little to show for itself, in his address a year later.
Former Rep. Brad Miller (D-N.C.), a Wall Street critic who was passed over to lead that unit, was unpersuaded by the DOJ complaint. "Are they worried that because of sequestration the FBI will interview critical witnesses three years after the statute of limitations has expired instead of just one year? Financial fraud investigations were already under a 'do not resuscitate' order and unresponsive to deep stimulation," Miller told HuffPost. "It's hard for me to worry that DOJ will now be less 'aggressive.'"
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