WASHINGTON - President Barack Obama will issue an executive order on Tuesday creating an administration-wide task force to crack down on financial fraud following a rise in mortgage scams and high-profile Wall Street trading scandals, an administration official said.
The order will direct the task force to investigate and prosecute financial crimes connected to the past year's financial crisis and to try to deter future fraud, said the official, who declined to be identified.
The stakes are high for the administration, particularly with a weak economy, anger about huge Wall Street bonuses and outrage that securities regulators missed one of the biggest frauds in U.S. history involving Bernard Madoff, who bilked investors of as much as $65 billion in a decades-long scheme.
The administration has long pledged to become more aggressive in fighting financial crime. The task force is set to be announced at a 12 p.m. EST Justice Department news conference that will include Treasury Secretary Timothy Geithner and Attorney General Eric Holder.
The task force will be chaired by Holder and will include the Justice, Treasury and Housing and Urban Development departments and the Securities and Exchange Commission, the official said.
The announcement comes a week after the Justice Department lost a pivotal criminal fraud case in New York against two managers from Bear Stearns whose hedge funds collapsed at the early stages of the financial crisis. Securities regulators still plan to pursue their own charges against the two men.
A senior Justice Department official said last week that the acquittals of the Bear Stearns managers were not a setback and the government would still pursue such cases.
The administration official said the timing of the announcement of the task force was unrelated to the Bear Stearns case, and rejected any suggestion that it had taken a long time to come up with the task force.
The Bush administration had a similar corporate fraud task force formed after the scandals earlier in the decade like the collapse of Enron Corp, the giant energy trader based in Houston.
(Additional reporting by Rachelle Younglai, Editing by Philip Barbara)