Congress gives final OK to mortgage fraud bill

WASHINGTON Mon May 18, 2009 7:28pm EDT

WASHINGTON (Reuters) - The U.S. House of Representatives gave final approval on Monday to a bill that will create an independent commission to investigate the cause of the U.S. economic meltdown and give federal prosecutors more legal clout and staff to crack down on financial fraud.

On a vote of 338-52, the House passed the bill, which the Senate had previously approved. It now goes to President Barack Obama, who is expected to sign it into law within days, a Democratic leadership aide said.

The fraud bill is one of three major measures which could go to Obama for his signature before the Democratic-led Congress heads off for its Memorial Day recess.

The others are a bill to crack down on abusive interest rate increases and fees by credit card companies and one to help distressed homeowners escape predatory mortgages.

The measure approved late Monday creates an independent 10-person commission with subpoena power to investigate the cause of the U.S. economic crisis.

The bill extends anti-fraud legislation to cover Troubled Asset Relief Program, or TARP, stimulus money and extends mortgage fraud law to all mortgage lending businesses.

The legislation is also designed to step up the battle against white-collar crime. Mortgage fraud is believed to have been a significant factor in the U.S. subprime mortgage collapse and subsequent international financial downturn.

The bill authorizes $165 million for each of the next two fiscal years to investigate fraud, with much of the money going to the Justice Department -- in particular, the Federal Bureau of Investigation.

That money will allow the FBI to hire 190 special agents and more than 200 other professionals, which would nearly double its mortgage and financial fraud program, according to the office of House Speaker Nancy Pelosi.

The funding will allow the FBI to increase the number of mortgage fraud task forces to more than 50 nationwide from 26, Pelosi's office said.

The bill gives the Postal Service, Department of Housing and Urban Development, Secret Service and Securities and Exchange Commission additional money to root out fraud.

(Reporting by Diane Bartz; Editing by Steve Orlofsky)