In his State of the Union address last night, President Barack Obama announced the creation of two new law enforcement units, one targeting financial crimes, the other unfair trade practices.
Both announcements drew applause, though it's not entirely clear how the new initiatives will differ from some existing efforts.
Obama in his speech called on Attorney General Eric Holder Jr. to create a special unit of federal prosecutors and state attorneys general to expand investigations into "the abusive lending and packaging of risky mortgages that led to the housing crisis."
"This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans," Obama said.
DOJ officials said the department has already devoted significant resources to combating financial fraud. The Obama administration in 2009 put together the Financial Fraud Enforcement Task Force, now led by veteran prosecutor Michael Bresnick. Bresnick more recently served as an assistant chief in the Justice Department's Fraud Section.
Justice Department officials said the new mortgage working group will be run out of the Financial Fraud Enforcement Task Force. The group is focusing on mortgage origination and securitization abuses.
Lanny Breuer, the assistant attorney general for the Criminal Division, and Robert Khuzami, the director of enforcement at the U.S. Securities and Exchange Commission, will serve as leaders of the mortgage working group.
Co-leaders include John Walsh, the U.S. attorney for Colorado, and Tony West, the DOJ's top lawyer in the Civil Division. New York Attorney General Eric Schneiderman will lead the effort on the state level, DOJ officials said.
The Justice Department said the working group has several goals, including holding accountable any financial institution that violated the law and providing compensation to victims and providing assistance to struggling homeowners.
"The administration is committed to ensuring that justice and relief are provided for the millions of American families harmed by the financial crisis," DOJ said in a statement. "This Working Group will focus on misconduct by financial institutions in the origination and securitization of mortgages that led to the global financial crisis."
DOJ officials said federal enforcement agencies and state attorneys general are continuing with negotiations to resolve allegations of misconduct-including so-called robosigning-in the home loan servicing market.
The initiative won praise from liberal advocacy group the Campaign for America's Future. "It is vital to this country that the banks are made accountable," said co-director Robert Borosage in a statement. "It is vital that they do not see the law as simply a minor price of doing profitable business, a speed bump on the way to their bonuses....The President announced a strong step towards the accountability that we need."
Obama also announced the creation of a Trade Enforcement Unit that will be charged with "investigating unfair trading practices in countries like China," he said. "It's not fair when foreign manufacturers have a leg up on ours only because they're heavily subsidized."
According to the "Blueprint for an America Built to Last" released by the White House to supplement the speech, the unit "will bring together resources and investigators from across the Federal Government to go after unfair trade practices."
Trade publication Inside U.S. Trade reported that "informed sources" say the unit will be run out of the White House and led by Deputy National Security Advisor for International Affairs Michael Froman.
A White House spokeswoman declined comment. In the Blueprint for America, the White House also stated that "When competitors like China offer unfair export financing to help their companies win business overseas, the United States will provide financing to put our companies on an even footing."
Some trade lawyers see this a potentially problematic, given World Trade Organization prohibitions on government subsidies of domestic industries.
"Whether any particular export financing by one WTO member -- or counter-financing by another -- is legal or illegal under WTO rules is likely to be the subject of WTO dispute settlement under the WTO subsidies agreement," said Greenberg Traurig global practice group co-chair James Bacchus, who is a former WTO chief judge.
Another trade lawyer who asked not to be quoted by name because the policy may effect pending cases called the president's plan "a Wild West 'tit for tat' approach... Responding in kind to alleged subsidies provided by other governments simply puts the U.S. at risk of being hauled before the WTO itself."
Obama also promised "more inspections to prevent counterfeit or unsafe goods from crossing our borders," he said. "It's not right when another country lets our movies, music, and software be pirated."
Stopping the flow of goods that infringe U.S. intellectual property rights is the responsibility of U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement, both part of the Department of Homeland Security. Border agents seized nearly 25,000 shipments of infringing goods from abroad in fiscal year 2011 - up 24 percent over 2010. The number one source country for knockoff products was mainland China, which accounted for 62 percent or $124.7 million of the total domestic value of seizures.
DHS spokesman Matt Chandler said, "There will be more inspections to prevent counterfeit or unsafe goods from crossing our borders. Details on this effort will be forthcoming in the weeks and months ahead."
By Mike Scarcella and Jenna Greene