The industry shouldn't expect the government's campaign against bank fraud to let up any time soon.
Speaking at a recent Georgetown University Law Center conference, senior officials at the Justice Department and Federal Deposit Insurance Corp. said bank fraud remains a top law enforcement priority.
"Banking prosecutions are here to stay," said Mary C. Spearing, chief of the Justice Department's fraud section. "It is still a major concern at the department."
Bank fraud encompasses a variety of crimes, including embezzlement, lying to regulators, check kiting, and diverting loan proceeds to personal uses.
The Federal Bureau of Investigation has more than 8,000 pending bank fraud probes, Ms. Spearing said. Also, the U.S. attorneys offices have 1,346 cases involving losses of at least $100,000, and the fraud section at Justice has 395 active cases, she said.
"You are not going to see a dramatic drop-off going forward," Ms. Spearing said. "We are still getting bank fraud referrals all the time."
The Justice Department is about to get some help investigating these cases. FDIC Inspector General Gaston L. Gianni Jr. said he plans to turn his staff loose.
"I understand the FBI is the primary enforcer," he said. "But there are a lot of demands on the FBI, and they might not be able to devote as many resources as the IG's (Inspector General's) office."
Mr. Gianni said his office must protect the deposit insurance fund, which is affected each time fraud causes a bank to fail. He said his staff, which includes more than 300 people in field offices and in Washington, has the expertise to uncover criminal violations.
The government lawyers did bring one olive branch to the conference. Ms. Spearing said her unit is willing to listen to any lawyer who believes prosecutors are treating his banking client unfairly. If her staff agrees, they'll drop or adjust the charges. But she urged lawyers to make their argument first to the local prosecutors and their bosses.
Her offer, however, was greeted with some skepticism by lawyers on the panel. "You are wasting your breath and probably giving away your case," said William H. Jeffress Jr., a partner at the Washington law firm of Miller, Cassidy, Larroca & Lewin.
The only instances in which the Justice Department will overrule one of its local prosecutors is if the case violates a department policy or relies on a dubious legal theory, he said.
John K. Villa, a partner at the Washington law firm of Williams & Connolly, said he's not surprised by the department's continuing interest in bank fraud.
"It is easier to prove a banking case today than any other kind of case," he said.
That's because banks file criminal referral firms on suspicious activities. Also regulators are constantly looking for violations of the law during their safety-and-soundness and compliance exams, he noted.
Also, prison sentences for bank fraud cases can be more than twice as long as for securities fraud cases, he said. "Prosecutors, if given the alternative, may choose banking over securities fraud for the same crime because you get more bang for the buck," he said.
Mr. Villa said he expects the Justice Department to slowly shift away from prosecuting individual bankers and start targeting lawyers, accountants, and others who overcharged the government for services during the height of the banking and thrift crisis.