GOVERNMENT

WASHINGTON, DC -- The House Financial Services Committee Wednesday voted to create a new computer network to link together the existing databases of U.S. state and federal banking, securities and insurance regulators in an effort to combat financial fraud. More than 200 separate state and federal agencies currently share responsibility for financial regulation in the United States. Allowing them to better exchange disciplinary and enforcement data is intended to make it harder for fraudsters barred from one industry to simply resurface in another. The bill ``would link these existing antifraud records via a network that may be as simple as a computer search engine,'' said the committee's chairman, Ohio Republican Rep. Michael Oxley. ``In this way, the regulators can effectively pool their information and shut down fraud at its inception.'' Attention was focused on the issue by the high-profile case of financier Martin Frankel, who was barred from the securities industry in the early 1990s only to reemerge as the alleged mastermind of one of America's largest insurance frauds. The bill gives the regulators six months to plan the new network, and two years to get it up and running. To resolve privacy concerns, only information about public, final disciplinary or enforcement actions will be shared. If regulators use data from the network to take action against any financial services professionals, those individuals must first be given the information at issue and a chance to respond. No information about consumers will be gathered or exchanged. The financial industry estimates the cost of financial fraud at over $100 billion a year, and says much of those losses are eventually passed on to consumers.