Holder still owes you an apology


It has been 17 months since Attorney General Eric Holder held a news conference to tout the successes of a high-profile task force on mortgage fraud. And it has been seven months since the Justice Department admitted that the crime statistics he trumpeted there were grossly overstated.

How bad was it? At the carefully scripted October 2012 media event, Holder said the department’s Distressed Homeowner Initiative had resulted in charges against 530 criminal defendants, including 172 executives. The actual number of defendants was 107, or 80 percent less, and the department hadn’t tracked how many of them were executives. Similarly, Justice originally said the losses to homeowners were $1 billion. It later cut that figure to $95 million, while the number of victims was revised to 17,185 from 73,000.

Bloomberg News published an article shortly after Holder’s news conference pointing out that the government’s numbers included cases that occurred before the initiative began in 2011. I wrote about the cooked numbers, too, both before and after the Justice Department corrected them.

Now we finally have some of the details behind the debacle. The department’s Office of the Inspector General released this week a 52-page audit report examining Justice’s efforts to address mortgage fraud. Here’s an excerpt from the report’s conclusion:

“The DOJ’s release of significantly flawed information at a highly publicized press conference in October 2012 regarding the purported success of the (Financial Fraud Enforcement Task Force’s) and the DOJ’s recent mortgage fraud initiative reflects the lack of accurate data maintained by the department regarding its mortgage fraud efforts, as well as the department’s serious failure to adequately vet information that it was presenting to the public. Only days after the press conference the department had serious concerns over the accuracy of the reported statistics, yet it was not until August 2013 when the department informed the public that the October 2012 reported statistics were indeed flawed. Moreover, during those 10 months, the department continued to issue press releases publicizing statistics it knew were seriously flawed. We believe the department should have been more forthright at a much earlier date about this flawed information.”

In a response letter, Deputy Attorney General James Cole said: “While the errors associated with the data in the initial (Distressed Homeowner Initiative) announcement were related to the unique nature of that effort, the department has committed to putting robust measures in place to help ensure correct reporting of future data in press releases and conferences.” He said the department concurred with the audit report’s recommendations regarding data collection and reporting.

There are some important questions the report failed to address: Were any officials at Justice or the FBI deliberately trying to inflate the numbers? And did anyone there turn a blind eye to their falsity before the numbers were released publicly? The report makes the errors out to be some sort of bureaucratic bungle — “breakdowns in the process” it called them — caused by ill-informed government workers who didn’t know the proper way to collect data.

Yet the report seems to ignore the reality that the Justice Department and FBI had every incentive to juice their stats, because of the relentless criticism they received over their failure to identify even a single senior Wall Street executive who committed crimes related to the financial crisis. So while it’s helpful to have the audit report, we don’t have the full story of why this particular fiasco happened. Nor did the inspector general’s office release any of the raw evidence it gathered as part of its examination, such as e-mail traffic or other documents.

Intentionally or not, the attorney general and the Justice Department misled the public at that news conference back in October 2012. This should be fertile ground for a congressional hearing. And Lord knows Darrell Issa, the chairman of the House Committee on Oversight and Government Reform, has held hearings over less serious offenses. If nothing else, it would provide Eric Holder the perfect opportunity to go before the cameras and apologize to the American people, which is something that’s long overdue.

Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter at @JonathanWeil.

© 2014, Bloomberg News.

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