By Peter Schroeder - 01/25/12 02:50 AM EST
President Obama announced a new unit devoted to major financial crimes as he offered tough words for Wall Street during his State of the Union address.
The unit will be staffed by "highly trained investigators" and charged with tracking "large-scale fraud." Obama argued Tuesday night that financial firms currently have little to fear for violating the law, and pressed Congress to beef up penalties for financial wrongdoing.
"Some financial firms violate major anti-fraud laws because there’s no real penalty for being a repeat offender," he said, according to prepared remarks. "That’s bad for consumers, and it’s bad for the vast majority of bankers and financial service professionals who do the right thing. So pass legislation that makes the penalties for fraud count."
The president also announced that Attorney General Eric Holder has been charge with establishing a special team of federal prosecutors and state attorneys general devoted to investigating abusive mortgage lending and the packaging of risky mortgages that contributed to the financial crisis.
The announcement came during a stretch of his annual address where the president offered pointed criticism of Wall Street while touting the Dodd-Frank financial reform law aimed at curbing the bad behavior that enabled the financial crisis.
"I will not go back to the days when Wall Street was allowed to play by its own set of rules," he said as he ran down a number of major provisions of the Wall Street overhaul.
"If you’re a big bank or financial institution, you are no longer allowed to make risky bets with your customers’ deposits," he said. "You’re required to write out a 'living will' that details exactly how you’ll pay the bills if you fail — because the rest of us aren’t bailing you out ever again."
He also used the speech as an opportunity to tout his recently appointed director of the new Consumer Financial Protection Bureau, Richard Cordray.
Obama ignored a Senate pro forma session to recess appoint Cordray to the position, after GOP senators blocked the nominee. The controversial move led to strong criticism from Republicans and business groups that opposed the bureau, who also suggested the appointment would be challenged in court.