The Joke Is On Schneiderman

Both Yves Smith at naked capitalism and David Dayen at FDL New Desk highlighted this part of an article penned by Glenn Thrush at Politico:

   Schneiderman, whose Lower Manhattan office overlooks Zuccotti Park where the Occupy movement began, felt like he was being strong-armed by Donovan and wasn’t shy about sharing his dissatisfaction. In late August, The New York Times reported that Schneiderman had come “under increasing pressure from the Obama administration to drop his opposition to a wide-ranging state settlement with banks over dubious foreclosure practices.”

   That did it for [HUD Secretary Shuan] Donovan, according to people close to him. Worried that the settlement was in danger of falling apart, he woke up at 5 a.m. the next morning and sketched the outline of what would emerge as the final compromise plan.

   A bit later he called Schneiderman, who immediately began re-arguing his case for holding banks accountable.

   Donovan stopped him: “Look, hear me out, I want to get past this,” he said, and proposed creating a special panel to probe wrongdoing by banks, to be co-chaired by Schneiderman. He also promised to limit the scope of any releases granted to the banks and rewrote his draft.

   Miller, who clashed with Schneiderman over the releases, said Donovan didn’t make many changes but was artful enough to sell it as a compromise to the New York attorney general, who wanted to seal the deal.

   “Essentially what Shaun did was let Eric take credit for shaping the release,” Miller said, “credit that wasn’t factually correct.”

Dayen points out, quite accurately, that with Schneiderman on board with the settlement deal the opposition to it fell apart:

Whether you believe in Eric Schneiderman’s ability to deliver a legitimate investigation on mortgage securitization fraud or not, you have to admit that the united front on opposition to a settlement on foreclosure fraud collapsed the moment that he agreed to helm that federal investigatory task force. He immediately separated “pre-bubble” and “post-bubble” conduct, allowing for a settlement on the latter while he joined the investigation on the former. And eventually, every other AG on the Democratic side fell in line, as they didn’t have New York as an anchor to stay out of a settlement.

That’s just what happened. And now we have HUD Secretary Shaun Donovan and Iowa AG Tom Miller, head of the executive committee that settled on foreclosure fraud, clowning Schneiderman on the record, saying that he got next to nothing in exchange for his holdout.

As Yves Smith notes “you can draw some damning conclusions conclusions about New York attorney general Eric Schneiderman’s role.”

Unless Schneiderman has been promised something bigger by Obama, US AG, he should walk away from this farce and, if he still can, withdraw his support of this “bait and switch” settlement that hasn’t been settled.

But I have a feeling, he’s accepted a bigger bribe and signing onto this bank bailout will assure his easy confirmation. (Just speculating that Obama will get a 2nd term.)