Sunday, Oct. 26, 2008 | 2:07 a.m.
When the FBI announced in September that it was widening its criminal probe of the nation’s financial turmoil to include four major Wall Street firms, the reaction of the Senate Judiciary Committee’s chairman was probably similar to the reaction of most Americans.
“The U.S. government is on the hook for anywhere from $800 billion to $1 trillion. And if people were cooking the books, manipulating, doing things they were not supposed to do, then I want people held responsible,” Sen. Patrick Leahy, D-Vt., had said.
The quote, printed in The Wall Street Journal, exuded a sense of confidence that if the FBI is on the case, the people responsible will be prosecuted.
There is a question now, however, if that confidence in the agency’s crime-fighting ability is well placed anymore. After 9/11 the Bush administration gave a new responsibility — counterterrorism — to about one-third of the FBI’s criminal investigators.
That move was understandable, but the FBI’s budget was never subsequently augmented to replenish its resources for investigating regular offenses, including financial crimes. So although it was comforting to learn that the FBI would be investigating some of the biggest players in the financial meltdown — Fannie Mae, Freddie Mac, Lehman Brothers and American International Group — the reality is that the agency is hamstrung by a shortage of financial investigators.
A lengthy story on this issue was written last week by The New York Times. The newspaper reported that the FBI, since 2004, had been warning of an impending and massive mortgage crisis but that its requests to the Bush administration for more money to hire urgently needed agents for nonterrorism investigations were rebuffed every year.
A study by researchers at Syracuse University was cited in the Times story. From 2000 to 2007, the number of white-collar crime cases investigated by the FBI and handled by federal prosecutors dropped 50 percent, the report stated.
It was a mistake to leave the FBI so short-handed that its ability to effectively investigate financial and other nonterrorism crimes has been shattered. An emaciated FBI will be one of many Bush administration problems the next president will inherit.