FIRREA law's coverage exempts no one

By Marc Castro

Oct 24, 2013 08:46 PM EDT

Banks, amongst them Citigroup and Credit Suisse Group AG, have been facing inquires and investlgations regarding mortgage bond related sales. The basis of said investigations is a 1989 law designed to retain oversight over Wall Street to determine it's role in the credit crisis and impose appropriate penalties upon the industry.

The Justice Department is reviewing the liability of both Citigroup Inc and Credit Suisse Group AG under the Financial Reform, Recovery and Enforcement Act. This law covers specific misconduct that affect federally insured financial firms according to people with knowledge of the law's application. Other banks currently under the law's ambut are JPMorgan Chase & Co and Bank of America Corp.

A task force appointed by President Barack Obama utilize the law's application, which is a vestige of the savings and loan crisis of the 1980s. It examines mortgage bond underwriting which had fuled investor losses resulting in the largest government initiated bailouts of financial institutions back in 2008. The law has a ten year statute of limitations, which allows investigators twice the available time to file complaints for its violations compared to other enforcible laws in existence.

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