A U.S. Senate committee on Thursday voted to tighten laws against financial fraud, sending legislation to the full Senate for consideration.
The bipartisan Fraud Enforcement and Recovery Act would place mortgage lenders who are not federally regulated within the scope of bank-fraud laws applying to "financial institutions." It passed the Senate Judiciary Committee on a voice vote.
"When people rob banks, they know they'll go to jail. When bankers rob people, they should know they'll go to jail, too," said committee member Edward Kauffman, a Democrat.
A two-year $490 million funding package would authorize the the FBI, the Justice Department and other law enforcement agencies to hire more fraud prosecutors and investigators, and FBI mortgage-fraud task forces would receive more assistance from federal prosecutors.
The proposal would also expand the main federal fraud law to protect money spent through the bank-bailout Troubled Assets Relief Program and the $787 billion economic stimulus package.
The bill aims to help the government "investigate and prosecute the kinds of financial frauds that have so severely undermined our economy and hurt so many hard-working people," Democratic committee Chairman Patrick Leahy said.
A Justice Department official supported the legislation at a hearing last month.
It is unclear when the full Senate will take up the measure, committee spokeswoman Erica Chabot said. The House of Representatives also must approve the measure for it to become law. Spending to fund the authorized increases would have to be approved separately.
Other provisions in the legislation would:
-- Cover commodities futures and options under federal securities law.
-- Clarify the criminal money-laundering law to ensure that "proceeds" of an unlawful activity refer to total revenues, not just profits.
-- Widen the reach of the federal False Claims Act, which allows private individuals to sue businesses for submitting phony bills to the government. (Editing by Cynthia Osterman)
Source: www.reuters.com, By Randall Mikkelsen
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