U.S. Senate backs panel to probe financial fraud

WASHINGTON (Reuters) - The U.S. Senate voted on Wednesday to create an independent commission to investigate the cause of the worst U.S. economic crisis in decades.

A street sign can be seen outside the New York Stock Exchange in New York March 11, 2009. REUTERS/Lucas Jackson

“The only way to get an objective evaluation of where mistakes were made is to create an independent commission of experts to ask what went right, what went wrong and what could we have done to prevent this,” said Republican Senator Johnny Isakson, a chief sponsor of the measure.

On a vote of 92-4, the Senate approved the measure as an amendment to a bipartisan bill headed toward anticipated passage that would crack down on financial fraud. Both the House and Senate would have to pass legislation to create a commission before it could be signed into law by President Barack Obama.

“The commission ... will investigate wrongdoing and help establish rules to help shore up our national economy and ensure this never happens again,” said Democratic Senator Kent Conrad, another chief sponsor.

The 10-member, bipartisan Financial Markets Commission would be modeled after the 9-11 Commission, which investigated failures leading up to the September 11, 2001, attacks on the United States and made recommendations on how to avoid another such assault.

The commission would have subpoena power, 18 months to investigate the financial crisis and the authority to refer to the U.S. attorney general and state attorneys general any evidence that institutions or individuals violated the law.

At the end of its probe, the commission would report its findings and recommendations to Congress.

Members of the commission would be appointed by congressional Democratic and Republican leaders. They would include financial experts and exclude members of Congress.

House Democratic Leader Steny Hoyer earlier on Wednesday voiced support for creation of such a commission. “A commission certainly could be useful,” Hoyer told reporters, adding “We are moving in that direction.”

The overall Senate bill would extend federal fraud laws to mortgage lending businesses, which the U.S. government does not now regulate or insure.

The bill would give the Justice Department $165 million a year for 2010 and 2011 to hire investigators and prosecutors to fight fraud. The bill would also give extra funds to the Securities and Exchange Commission, the U.S. Postal Inspection Service and other agencies to fight fraud.