Use of Firrea to Impose Liability in the Wake of the Global Financial Crisis: a New Weapon in the Arsenal to Prevent Financial Fraud

Abstract

I. THE GLOBAL FINANCIAL CRISIS ........................................................ 122 II. FIRREA ............................................................................................. 127 A. Civil Penalties ......................................................................... 130 B. Standard of Proof .................................................................... 133 C. Administrative Subpoenas and Other Fact-Finding Tools ...... 134 D. Civil Forfeiture ........................................................................ 134 III. FIRREA’S RECENT USE ................................................................... 135 A. United States v. Bank of New York Mellon (BNYM) ........... 136 B. United States v. Countrywide Financial Corporation/Bank of America ............................................................................... 138 C. United States v. Wells Fargo Bank ......................................... 140 D. United States v. McGraw-Hill Companies ............................. 141 E. Lessons Learned ...................................................................... 142 IV. FIRREA: SOUND PUBLIC POLICY? ................................................. 144 A. The Public Policy of Financial Regulation ............................. 144 B. FIRREA: The Nature of a FIRREA Case and the Issue of Procedural Safeguards. ............................................................ 147 1. Legal Categories ................................................................ 147 i. FIRREA as Civil Law ................................................. 147 ii. FIRREA as Criminal Law ........................................... 149 iii. FIRREA as Administrative Law ................................. 153 2. Procedural Safeguards ....................................................... 157 V. CONCLUSION ..................................................................................... 159

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