Lawmakers snub AG request to hire five for banking fraud unit with mortgage settlement windfall
By Bill Smith New Hampshire Union Leader
CONCORD – Efforts by the state Attorney General's Office to create a fraud squad to keep an eye on the state's bankers has again been derailed by a House-Senate committee.
The Joint Fiscal Committee of the Legislature Friday refused to act on Attorney General Michael Delaney's request for authority to hire five people to "investigate and prosecute financial fraud, including banking, mortgage and securities fraud" during the rest of the current fiscal year.
The money would come from part of New Hampshire's share of the settlement of a 49-state suit against national banking and mortgage companies.
That settlement provided $10,575,447 to the state. Most of the proceeds are being used to help victims and potential victims of fraud and sharp practices at the hands of mortgage lenders.
Deputy Attorney General Ann Rice told the committee that the additional staff would be able to take on investigation and prosecution of major institutions.
Delaney would hire a lawyer for combined salary and benefits of $53,234; an investigator for $42,783, a financial analyst for $51,039, a paralegal at $32,640 and a part-time secretary, at $7,898.
Rice told the committee that the unit's work would bring money to the state, through the award of the costs of investigation and prosecution in cases it wins, as well as by participating in multi-state investigations and prosecutions.
"When a state is able to actively involve themselves in that they get , over and above whatever the settlement is, an additional amount of money for their active participation," Rice said. "We would see this as a revenue builder."
Sen. Bob Odell, R-Lempster asked Rice whether a revenue-seeking prosecutor might subject banks to unnecessary or unfair prosecution.
"I've never thought of prosecution as a form of revenue generation for state government" Odell said.
Rice conceded that her use of the term ""evenue-builder" didn't really convey the purpose of the five-person team.
"I certainly don't see that the purpose of prosecution is revenue generation, absolutely not," Rice responded. "It's not intended to be a moneymaker for the state."
Rice said she expected many prosecutions by the new fraud unit would be referrals from existing regulators.
"Typically the way these things would come to us is through the regulatory agency which has information about activity that may be beyond their ability to enforce with the regulatory laws," she said.
The New Hampshire Bankers Association, which represents most banking institutions with a presence in the state, opposes the creation of the new unit. The bankers group claims New Hampshire institutions are already subject to oversight by state regulators.
Bankers Association Vice President Thomas Fahey said after the meeting that increased oversight from Washington in the aftermath of the mortgage industry meltdown is already diverting resources at large and small banks.
"Banks are now dealing with totally new regulations and totally new ways of regulating," he said.
Both Republicans and Democrats joined the 7-3 vote to table the proposal. The members of the committee that held office in the last legislative term also refused to authorize the positions at a meeting two days after last November's election.
The battle over giving the state's top prosecutor the staff to investigate and prosecute bankers isn't over. The five new positions are included in the attorney general's proposed 2014/2015 biennial budget.