January 9, 2013
William Johnson of the Fried, Frank law firm has an interesting analysis of enforcement cases that invoke the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) which is unfortunately behind the NYLJ paywall.
Johnson discusses the history of FIRREA which arose from the ashes of the S&L Crisis of the 1980s. He notes that FIRREA extended the statute of limitations to 10 years for mail and wire fraud statutes (18 U.S.C. sections 1341 and 1343) where the crime “affected” a financial institution.
The government is turning to FIRREA at this point because of its ten year statute of limitations which doubles the statute of limitations that would apply to many other causes of action. Given that we are now about five years out from the crisis, he says that this development is not surprising.
He identifies five cases where the Department of Justice has brought FIRREA causes of action arising from alleged conduct relating to mortgages:
- United States v. Buy-a-Home, No. 1:10-cv-09280 (S.D.N.Y.) (PKC) (filed Dec. 13, 2010)
- United States v. Allied Home Mortgage, No. 1:11-cv-05443 (S.D.N.Y.) (VM)
- United States v. CitiMortgage, No. 1:11-cv-05473 (S.D.N.Y.) (VM)
- U.S. v. Wells Fargo Bank, No. 1:12-cv-07527 (S.D.N.Y.) (JMF) (JCF) (filed Oct. 9. 2012)
- U.S. v. Bank of America, No.1:12-cv 1422 (S.D.N.Y.) (JSR)
He concludes that the government has “turned FIRREA on its head” by stretching its provisions to encompass alleged wrongs against entities such as Fannie and Freddie as well as HUD as well as “financial institutions” as that term is defined in FIRREA.
I don’t know enough to have a position on whether the government has turned FIRREA on its head, but its ten year statute of limitations must look very tempting to prosecutors and regulators as the events that were at the root of the crisis receded further and further from the present.| Permalink