While there are there are many reasons to cheer President Obama’s announcement during his State of the Union address that he was forming a special unit within the Financial Fraud Task Force to investigate the fraud and other illegalities that caused the financial crisis and collapse of the housing market, there are plenty of reasons to be very skeptical.
The unit will be co-chaired by New York Attorney General Eric Schneiderman who withdrew from the DOJ panel of state attorney generals that was working on a settlement with the big banks over their part in mortgage fraud. That’s about all the good news there is. The other members of the unit are Lanny Breuer, assistant attorney general at the Criminal Division of the Department of Justice, Robert Khuzami, director of enforcement at the SEC; John Walsh, a U.S. attorney in Colorado, and Tony West, assistant attorney general in the Civil Division at DOJ. Also, the And there in lies the farce of this unit.
Lanny Breuer, along with Attorney General Eric Holder, was partner in the Washington DC law firm Covington & Burling that represented a number of big banks and MERS which are at the center of alleged foreclosure fraud. He recently appeared on “60 Minutes” making numerous lame excuses justifying the lack of prosecutions out of the Justice Department. Despite the evidence, including records from federal and state courts and local clerks’ offices around the country, showing widespread forgery, perjury, obstruction of justice, and illegal foreclosures on the homes of thousands of active-duty military personnel, the Holder DOJ has not brought any criminal cases against big banks or other companies involved. There is a clear conflict of interest and possible ethics violations.
The director of enforcement of the SEC is another embarrassment. Robert Khuzami, a former general counsel at Deutsche Bank, one of the leading trustees in securitization, will no be looking into the instruments of the fraud he helped create. It has been Khuzami’s office that has been giving the banks no-fault settlements which recently were rejected by U.S. District Judge Jed S. Rakoff.
U.S. Attorney in Colorado, John Walsh, is most notable for justifying the crackdown on medical marijuana dispensaries in that state. He doesn’t appear to have any experience in prosecuting banking fraud.
The last unit member is Tony West, the brother-in-law of California’s Attorney General, Kamala Harris who like Schneiderman withdrew from the DOJ agreement because it was too little and didn’t hold the banks or companies libel. West, a lawyer with a Oakland, CA law firm and a former US attorney, appears to have little experience with financial fraud.
Is this really the way to do this? Why not create a Special Prosecutor with the budget and subpoena power rather than a committee within a task force that has done minimal in the last three years to investigate fraud? Both David Dayen at FDL News Desk and Yves Smith at naked capitalism think that Schneiderman is being used for a charade that would eventually let the banks get away with fraud anyway. But is Schneiderman that easily misled or dazzled by Obama’s offer? He certainly didn’t sound like he was going to end his state level investigation in this release from his office:
I would like to thank President Obama for his leadership in the creation of a coordinated investigation that marshals state and federal resources to bring justice for the victims of the misconduct that caused the mortgage crisis.
In coordination with our federal partners, our office will continue its steadfast commitment to holding those responsible for the economic crisis accountable, providing meaningful relief for homeowners commensurate with the scale of the misconduct, and getting our economy moving again.
The American people deserve a robust and comprehensive investigation into the global financial meltdown to ensure nothing like it ever happens again, and today’s announcement is a major step in the right direction.
(emphasis mine)
Considering who has run the Treasury, the revolving door of bankers in the Oval Office and Obama’s weak efforts in investigating or prosecuting any person or entity that would ruffle the feathers of his Wall St. contributors over the last three years, there is a whole lot of reason to be doubtful about the president’s sincerity or any future hope of substantial relief for homeowners.
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