Not many politicians will publicly make the case that the Department of Justice is being unduly tough on white-collar financial crimes, but the House of Representatives is set to vote Thursday on a bill that would meaningfully weaken the ability of federal investigators and prosecutors to go after certain cases of corporate malfeasance.
The pleasant-sounding “Financial Institution Customer Protection Act,” written by Missouri Republican representative Blaine Luetkemeyer, would change the federal Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) statutes to remove investigatory power into crimes “affecting” federally insured financial institutions, and reserve it only for crimes “by” and “against” them.
Banks or payment processors would no longer be held criminally responsible for simply aiding fraudulent activity involving customer accounts, since the fraud was not primarily conducted by the bank, nor against it. The federal government recently brought cases against CommerceWest Bank, Plaza Bank, and Four Oaks Bank & Trust for knowingly helping scammers withdraw funds from customer accounts, and if Luetkemeyer’s bill is passed, no similar cases could be brought by the government going forward.
The push coincides with a Republican-led effort in the Senate that would also handicap the federal government’s ability to prosecute a wide variety of white-collar crime. The massive and bipartisan Senate criminal justice reform bill mainly focuses on reducing sentences for nonviolent drug offenders, but Republican senators are pushing an amendment that would increase the burden of proof for prosecuting corporate executives to “knowing” crimes, not just reckless or negligent ones.
In an interview with The Nation, Senator Elizabeth Warren lambasted the two bills and accused Republicans of using the all-consuming presidential contests as a distraction.
“The Republicans think no one is looking right now, that all of the public attention is somewhere else, and that this is a chance to try to slip through an amendment to make it harder to prosecute white-collar criminals,” she said. “It’s like you can’t make this stuff up, right? The idea that the Republicans are trying to gut one of the main laws to prevent bank fraud—that’s their response to the 2008 financial crisis.”
Warren said she also believes the Republicans have overreached, and are inviting a serious public blowback during a crucial political year. “If the Republicans succeed in further undercutting the laws to hold big banks accountable, I think it will become a major issue by next November.”