Won’t Get Fooled Again?

Boy, do I feel like an idiot. I’ve been out there on radio and TV in the last few months saying that I thought there was a chance Barack Obama was listening to the popular anger against Wall Street that drove the Occupy movement, that decisions like putting a for-real law enforcement guy like New York AG Eric Schneiderman in charge of a mortgage fraud task force meant he was at least willing to pay lip service to public outrage against the banks.

Then the JOBS Act happened.

The “Jumpstart Our Business Startups Act” (in addition to being a viciously stupid and dishonest law, the Act has an annoying, redundant title) will very nearly legalize fraud in the stock market.

Actually, that’s not putting things in strong enough language. In fact, one could say this law is not just a sweeping piece of deregulation that will have an increase in securities fraud as an accidental, ancillary consequence. No, this law actually appears to have been specifically written to encourage fraud in the stock markets.

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This is like formally eliminating steroid testing for the first five years of a baseball player’s career. Yes, you can pretty much bet that you’ll see a lot of home runs in the first few years after you institute a rule like that. But you’d better be ready to stick a lot asterisks in the record books ten or fifteen years down the line.

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(L)et’s just say this is a dramatic step taken by Barack Obama. Nobody should have any illusions about where he stands on Wall Street corruption after this thing. Boss Tweed himself couldn’t have done any worse.

Speaking of Eric Schneiderman-

CREDO Calls Out Securitization Fraud Task Force: Investigators Not Even Deployed

By: David Dayen, Firedog Lake

Monday April 9, 2012 8:15 am

We have heard very little from that task force since it was inaugurated in January, and CREDO has become the first progressive group to come forward with their concerns. But more is coming. This is the kickoff of a pressure campaign among several groups, querying the Administration in public about what was described to me last week as “the case of the missing task force.”

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This matters not just because of broken promises, but because the foot-dragging has serious consequences. Many of the various types of fraud that this task force is supposed to be investigating have statutes of limitations, some of which will run out on the very last securitization deals completed before the housing bubble collapsed. There are several 10-year statutes of limitations, particularly through the federal law FIRREA. But other statutes have a 5-year limit, and the last deals were made in 2007. So this looks suspiciously like running out the clock.

The Administration obviously must answer these charges, and I’ll try to get some clarity on that today. But Eric Schneiderman’s office needs to also speak up. Schneiderman and his staff said specifically that they would walk from the task force if they felt it wasn’t living up to the promises made to him in terms of resources and will. We’re only three months in, but that looks exactly like what’s happening. If there are bad actors blocking investigations, Schneiderman needs to say it, as he vowed to do.

When the coalition seeking accountability from the banks acquiesced to a settlement on foreclosure fraud with the hope that this task force would bring the investigations, prosecutions and relief needed, they said that election-year pressures would force something real to come about. That has proven so far to be a chimera. We shall see if they can elevate the issue again, with less leverage thanks to the settlement’s completion.