Tag Archive: Mortgage Fraud

Apr 11 2016

Nobody Goes To Jail

Once again the Obama Department of Justice has reached a settlement with a To Big To Fail Bank for pennies on the dollar and let the perpetrators walk away without criminal sanctions or penalties. Goldman Sachs will pay $5.06bn for its role in the 2008 financial crisis, the US Department of Justice said on Monday. …

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Dec 23 2014

No Jail Time for Billionaire But There Is a Bit Justice

As David Dayen puts it, “it isn’t prison” but the consequences are at least a bit satisfying.

Finally, a Financial Executive Is Sacked for His Company’s Misdeeds

By David Dayen, The New Republic

Lets say you run a company whose misdeeds are splashed across the pages of the business section on an almost weekly basis. you might reasonably expect to be fired without delay. But then let’s stipulate that you’re in the financial service industry. Recent history suggest that you’ll be able to keep your job and your handsome bonus, and that even if law enforcement decide to penalize the company for improprieties, somebody else – like your shareholders – will pay those fines, leaving you to continue your charmed life unscathed.

William erbey, the billionaire chairman of the mortgage serving giant Ocwen, probably thought that would be his fate as well, but he didn’t anticipate the determination of New York Superintendent of Financial Services Benjamin Lawsky. On Monday, Lawsky announced that Erbey would step down from Ocwen and four related businesses, as part of the settlement of an investigation into the companies sad enduring legacy of ripping off homeowners.

The consequences for Erbey have been huge financial losses as Ocwen shares dropped 31% “after agreeing to a settlement that prevents it from acquiring mortgage-servicing rights until the company makes improvements to satisfy New York regulators.” The company must also provide $150 million for relief to homeowners and hire a monitor who will approve the appointment of two independent directors to Ocwen’s board and continue to oversee the business.

According to Forbes, poor Erbey is no longer a billionaire:

Erbey, according to Forbes’s Real Time Wealth Rankings for billionaires, lost over $300 million on Monday causing his net worth to fall to around $800 million and knocking him out of the billionaire ranks. He was worth as much as $2.5 billion in March when we published our annual listing of the world’s wealthiest. [..]

Forbes now calculates Erbey’s net worth at $802 million, as of late afternoon trading.

As Atrios said, “it’s sad that this is all we’ll get.”  

Jun 19 2014

Too Big To Fail Banks Are Getting Bigger

Last week the city of Miami sued JP Morgan Chase for its predatory lending practices in Miami’e minority neighborhoods that caused a wave of foreclosures resulting in blight and high crime in those areas

There has been no criminal prosecution of these banking behemoths by the Department of Justice, not because of lack of evidence but because Attorney General Eric Holder refused to bring those charges. Instead Holder has negotiated with the banks and, in the case of JPMorgan, directly with the CEO’s, imposing large fines that most of these banks recoup in hours. We know that the Obama administration is top heavy with former Wall Street and banking executives from Obama’s Treasury Department, to the Department of Commerce down to his latest appointment Thomas Wheeler, as chair of the Federal Communications Commission. Why has this been allowed? Why haven’t the regulations and reforms been enacted? Why no prosecutions? One word answer: Congress. As PBS’s [Bill Moyer notes Congress is their secret weapon

These finance executives took part in “scandals that violate the most basic ethical norms,” as the head of the IMF Christine Lagarde put it last month, including illegal foreclosures, money laundering and the fixing of interest rate benchmarks. In fact, banking CEOs not only avoided prosecution but got average pay rises of 10 percent last year, taking home, on average, $13 million in compensation.

  These “gentlemen” are among the leaders of the industry’s efforts to repeal, or water down, some of the tougher rules and regulations enacted in the Dodd-Frank legislation that was passed to prevent another crash. As usual, they’re swelling their ranks with the very people who helped to write that bill. More than two dozen federal officials have pushed through the revolving door to the private sector they once sought to regulate.

   And then there are the lapdogs in Congress willfully collaborating with the financial industry. As the Center for Public Integrity put it recently, they are “Wall Street’s secret weapon,” a handful of representatives at the beck and call of the banks, eager to do their bidding. Jeb Hensarling is their head honcho. The Republican from Texas chairs the House Financial Services Committee, which functions for Wall Street like one of those no-tell motels with the neon sign. Hensarling makes no bones as to where his loyalties lie. “Occasionally we have been accused of trying to undermine aspects of Dodd-Frank,” he said recently, adding, with a chuckle, “I hope we’re guilty of it.” Guilty as charged, Congressman. And it tells us all we need to know about our bought and paid for government that you think it’s funny.

Mr. Moyers was joined by economist Anat Admati, co-author of the book, The Bankers’ New Clothes, to discuss the bipartisan effort to defang Dodd-Frank and let these Too Big To Fail banks get even bigger.

Wall Street banks are lobbying to defang sections of the law related to derivatives – the complex financial contracts at the core of the meltdown. One deregulation bill, the “London Whale Loophole Act,” would allow American banks to skip Dodd-Frank’s trading rules on derivatives if they are traded in countries that have similar regulatory structures.



Full transcript can be read here

Aug 12 2013

Mortgage Fraud Settlement: Is a Fraud

As we have documented here at Stars Hollow, the task force that was created to pursue mortgage fraud and hold the banks accountable was, and is, a sham game to protect the banks from real relief for defrauded homeowners.

Your mortgage documents are fake!

by David Dayen, Salon

Prepare to be outraged. Newly obtained filings from this Florida woman’s lawsuit uncover a horrifying scheme

A newly unsealed lawsuit, which banks settled in 2012 for $1 billion, actually offers a different reason, providing a key answer to one of the persistent riddles of the financial crisis and its aftermath. The lawsuit states that banks resorted to fake documents because they could not legally establish true ownership of the loans when trying to foreclose.

This reality, which banks did not contest but instead settled out of court, means that tens of millions of mortgages in America still lack a legitimate chain of ownership, with implications far into the future. And if Congress, supported by the Obama Administration, goes back to the same housing finance system, with the same corrupt private entities who broke the nation’s private property system back in business packaging mortgages, then shame on all of us. [..]

Most of official Washington, including President Obama, wants to wind down mortgage giants Fannie Mae and Freddie Mac, and return to a system where private lenders create securitization trusts, packaging pools of loans and selling them to investors. Government would provide a limited guarantee to investors against catastrophic losses, but the private banks would make the securities, to generate more capital for home loans and expand homeownership.

That’s despite the evidence we now have that, the last time banks tried this, they ignored the law, failed to convey the mortgages and notes to the trusts, and ripped off investors trying to cover their tracks, to say nothing of how they violated the due process rights of homeowners and stole their homes with fake documents.

The very same banks that created this criminal enterprise and legal quagmire would be in control again. Why should we view this in any way as a sound public policy, instead of a ticking time bomb that could once again throw the private property system, a bulwark of capitalism and indeed civilization itself, into utter disarray? As Lynn Szymoniak puts it, “The President’s calling for private equity to return. Why would we return to this?”

White-collar fraud expert proves ‘mortgage-backed securities’ neither mortgage-backed nor secure

by Scott Kaufmann, The Raw Story

The forged documents were endorsed by employees of companies long bankrupt, executives who signed their name eight different ways, or “people” named “Bogus Assignee for Intervening Assignments” so that the banks could establish standing to foreclose in courts. The end result, according to white-collar fraud expert Lynn Szymoniak, is that over $1.4 trillion in mortgage-backed securities are still, to this day, based on fraudulent mortgage assignments.

The lawsuit against Wells Fargo, Bank of America, JPMorgan Chase, Citi and GMAC/Ally Bank was settled in early 2012 for $1 billion, but now that the evidence is unsealed, Szymoniak and her legal team are free to pursue the other named defendants, including HSBC, the Bank of New York Mellon, and US Bank. “I’m really glad I was part of collecting this money for the government, and I’m looking forward to going through discovery and collecting the rest of it,” Szymoniak told Salon.

Eric Holder Owes the American People an Apology

Jonathan Weil, Bloomberg News

The Justice Department made a long-overdue disclosure late Friday: Last year when U.S. Attorney General Eric Holder boasted about the successes that a high-profile task force racked up pursuing mortgage fraud, the numbers he trumpeted were grossly overstated. [..]

In an updated press release Friday, which corrected its initial release of last October, the Justice Department said a review of the cases found that the inflated figures included defendants who had been sentenced or convicted in fiscal year 2012 — not just people who had been criminally charged, as originally reported. Its original, lofty tally also included cases in which the victims weren’t distressed homeowners. [..]

What a charade. No wonder the government found it so difficult to bring a meaningful number of accounting-fraud cases against bank executives after the financial crisis. Its own books were cooked. [..]

This was the second time, mind you, that Holder’s Justice Department had pulled a stunt like this. In December 2010, Holder held a press conference to tout a supposed sweep by the president’s Financial Fraud Enforcement Task Force called “Operation Broken Trust.” (The mortgage-fraud program was part of the same task force.) As with the mortgage-fraud initiative, Broken Trust wasn’t actually a sweep. All the Justice Department did was lump together a bunch of small-fry, penny-ante fraud cases that had nothing to do with one another. Then it held a press gathering.

Between this sham that protects the banks and the egregious violations of the press and privacy of all Americans with abusive use of FISA, Eric Holder owes us more than an apology, he owes us his resignation as Attorney General.

May 07 2013

Mortgage Fraud Settlement: “Buyer’s Regret”

New York State Attorney General Eric Schneiderman announced that he plans to sue Wells Fargo and Bank of America over claims that they breached the terms of a multibillion-dollar settlement intended to end foreclosure abuses.

Under the terms of the settlement, banks have to abide by 304 servicing standards, like notifying homeowners of missing documents within five days of receiving a loan modification and providing borrowers with a single point of contact.

“Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure,” Mr. Schneiderman said. Since October 2012, Mr. Schneiderman’s office has documented 210 separate violations involving Wells Fargo and 129 involving Bank of America.

Shahien Nasiripour reports at Huffington Post that it’s unclear if Mr. Schneiderman can do this:

The agreement does not specify whether he can independently pursue legal action against the banks without first allowing the Office of Mortgage Settlement Oversight, run by (Joseph) Smith, to determine whether they are complying, a process that could take months.

Smith’s office will make public by June 30 its first required report on the banks’ compliance with the mortgage servicing standards. The deal dictates that the companies shall have an opportunity to correct potential violations once they are identified. If the same violations continue, the monitoring committee could launch lawsuits and levy penalties totaling as much as $5 million for each violation.

But as attorney and writer Abigail Field notes at naked capitalism, it would seem that AG Schneiderman has a case of buyer’s remorse and examines why this lawsuit is a lashing with a wet noodle:

Now that that A.G. Schneiderman’s learned that Bank of America and Wells Fargo have failed to service 339 New Yorkers according to the standards dictated by the Settlement, he’s served notice he intends to sue. Not for money; for “equitable relief.” Though I’ve not seen a filing, I imagine if he actually will seek an injunction to get Wells and BofA to start complying with (specific performance of) the four servicing standards Schneiderman is targeting in his press release: [..]

The Bottom Line

It’s really hard to see how this effort-even if A.G. Schneiderman triumphs-leads to the kind of systemic change that was possible when all of the liability for the banks’ bad acts was still on the table. You know, pre-settlement, when A.G. Schneiderman and a few other Democratic A.G.s looked like they were going to stand up for America and insist on a meaningful deal.

Consider, the most that can come of this is two of the five banks complying completely with four of the 304 Servicing Standards.

AG Schneiderman joined MSNBC”S All In host Chris Hayes for an exclusive interview about why, after a multibillion dollar settlement, banks are still not living up to rules about mortgages and refinancing.

Feb 13 2013

The Real SOTU: The White House Subverting the Rule of Law

Subverting the rule of law? How dare I? Well the 4th amendment, due process, kill lists, and the NDAA also speak to my title. Yes, they speak to it despite those that decided politicians were more important than the principles they pretended to have in 2004 now outed as hypocrites mostly. However, that being said, I’m talking about subverting the rule of law in a different way but equally as damaging on the economic front.

After all, it was at the SOTU merely just a year ago that President Obama assured us that something was going to be done about the Wall St. perpetrators of our mortgage and foreclosure crisis. This was a crisis in which they defrauded consumers with sub-prime NINJA loans pumping up the housing bubble and then dumping the private debt overhang onto the economy destroying over 10 trillion in housing wealth. This left consumers with massive loads of private debt and everyone else jobless like this recovery.

This White House’s DOJ has made a complete mockery of the concept of Justice in and of itself. That illusion of Justice is perpetuated to this day and normal people are devastated because of it. Let President Obama know you are not amused. I have.

Feb 13 2013

SOTU: One Year Ago (Up Date)

Last night President Barack Obama gave the annual State of the Union address before the nation and a joint session of Congress. He made a lofty speech outlining his plan for the nation over the next year, most of which are highly unlikely to come to fruition due to the intransigence of the Republican held House. Will any of this be remembered in a month? Or, for that matter, next year? Does anyone remember the promises and goals from last year’s SOTU? I doubt anyone remembers this:

EXCLUSIVE: Obama To Announce Mortgage Crisis Unit Chaired By New York Attorney General Schneiderman

by Sam Stein, The Huffington Post

WASHINGTON — During his State of the Union address tonight, President Obama will announce the creation of a special unit to investigate misconduct and illegalities that contributed to both the financial collapse and the mortgage crisis.

The office, part of a new Unit on Mortgage Origination and Securitization Abuses, will be chaired by Eric Schneiderman, the New York attorney general, according to a White House official.

Schneiderman is an increasingly beloved figure among progressives for his criticism of a proposed settlement between the 50 state attorneys general and the five largest banks. His presence atop this new special unit could give it immediate legitimacy among those who have criticized the president for being too hesitant in going after the banks and resolving the mortgage crisis. He will be in attendance at Tuesday night’s State of the Union address.

Ahh! Now, you remember that. Whatever happened to the Residential Mortgage-Backed Securities Working Group? Apparently not much.

Obama’s Mortgage Crisis Working Group Falls Short Of Billing

by Sam stein and Ryan Grim, The Huffington Post

A year later, progressives said they consider the panel a disappointment and, possibly, a diversion to placate Schneiderman and homeowner advocates. The Justice Department said it doesn’t know what the fuss is about.

“You described it as a unit that was announced to great fanfare,” said Tony West, the number three man in the Justice Department, in an interview. “A lot of people have the misimpression that this is some type of prosecutorial department that was set up. What the working group is is exactly that. It is part of the financial fraud enforcement task force. It doesn’t stand alone.” [..]

Schneiderman’s working group, critics said, has not lived up to that billing. [..]

According to those involved in putting together cases, officials at the SEC were naturally disposed to striking quick settlements rather than carrying out long-term investigations. The Justice Department, meanwhile, was worried about shaking a recovering housing market and fragile banks.

(Mike) Lux, in particular, pointed an accusatory finger at working group co-chairman Lanny Breuer, the assistant attorney general for the Justice Department’s Criminal Division, who has said he will leave his post next month. [..]

Whether driven by Breuer’s presence or not, the working group suffered from what the high-level source called “leaked leverage.” With different actors wanting slightly different outcomes, it closed cases that may have potentially been made bigger. Among those cited include one last month, when the Office of the Comptroller of the Currency and the Federal Reserve reached a $8.5 settlement with 10 U.S. banks on charges of foreclosure abuses.

Stein and Grim state that ‘progressives interviewed for this story who know and like Schneiderman offered the same conclusion: He got played.” Former blogger for FDL, David Dayen disagrees:

I agree with David, Mr. Schneiderman’s settlement with banks here in New York have been disappointing, to say the least. He is not some naive neophyte. He knew precisely what he was signing up for when he was offered the position with this group.

Up Date: 18:12 EST 2.13.13: From David Dayen at Salon:

Wall Street wins again

The secret truth: There never was a “task force” dedicated to ferreting out mortgage fraud

This is the key point.  There are no offices, no phones and no staff dedicated to the non-task force.  Two of the five co-chairs have left government.  What “investigators” there are from the task force are nothing more than liaisons to the independent agencies doing their own independent investigations.  In the rare event that these agencies file an actual lawsuit or enforcement action, the un-task force merely puts out a statement taking credit for it.  Take a look at this in action at the website for the Financial Fraud Enforcement Task Force, the federal umbrella group “investigating” financial fraud.  It’s little more than a press release factory, and no indictment, conviction or settlement is too small.  The site takes credit for cracking down on Ponzi schemes, insider trading, tax evasion, racketeering, violations of the Americans With Disabilities Act (!) and a host of other crimes that have precisely nothing to do with the financial crisis.  To call this a publicity stunt is an insult to publicity stunts. [..]

Maybe these groups who claim to be interested in accountability should have recognized the value of what pressured the White House to set up the diversionary tactic of a task force in the first place: public shaming.  Last month’s Frontline documentary “The Untouchables” has had arguably more of an impact on reviving moribund financial fraud cases than anything else.  Within a couple of weeks of its premiere, the head of the criminal enforcement division, Lanny Breuer, announced he would step down.  Then, DoJ suddenly decided to sue credit rating agency Standard and Poor’s over its conflict of interest in rating clearly fraudulent securities as safe assets, a case it had been investigating for two years.  You can view this as an accident of timing; it seems more like a direct response.  Shaming has done far more than a pretend task force, though that’s admittedly a low bar.  You would think outside pressure groups would have recognized the virtue of outside pressure instead of trying to play an inside game.

h/t priceman

 

Oct 03 2012

Don’t Expect Perp Walks

There will be no perp walks, or got that matter even arrests, in the civil suit against JP Morgan Chase for flawed mortgage-backed securities issued by Bear Stearns that was filed late Sunday night by Eric Schneiderman, New York State’s Attorney General. It’s the first lawsuit filed by  Residential Mortgage-Backed Securities Working Group that was formed in January following President Barack Obama’s State of the Union address.

The complaint contends that Bear Stearns and its lending unit, EMC Mortgage, defrauded investors who purchased mortgage securities packaged by the companies from 2005 through 2007.

The firms made material misrepresentations about the quality of the loans in the securities, the lawsuit said, and ignored evidence of broad defects among the loans that they pooled and sold to investors.

Moreover, when Bear Stearns identified problematic loans that it had agreed to purchase from a lender, it was required to make the originator buy them back. But Bear Stearns demanded cash payments from the lenders and kept the money, rather than passing it on to investors, the suit contends.

Unlike many of the other mortgage crisis cases brought by regulators such as the Securities and Exchange Commission, the task force’s action does not focus on a particular deal that harmed investors or an individual who was central to a specific transaction. Rather, the suit contends that the improper practices were institutionwide and affected numerous deals during the period.

The lawsuit, however, is not Federal and relies on NY state banking law:

The decision to pursue civil charges under New York’s Martin Act means that the state’s attorney general will not have to prove fraudulent intent, only that the firm was negligent in making any false or misleading disclosures. While easier to prove, that also indicates that the evidence to prove fraud was not strong enough to bring more serious charges.

Like so many cases related to the financial crisis, no individuals are named in the complaint. Nor does it appear that any criminal charges will emerge this long after Bear Stearns was pushed into the arms of JPMorgan by the federal government in a transaction routinely described as a fire sale.

Yves Smith is skeptical about any large fines:

It looks like Eric Schneiderman is living up to his track record as an “all hat, no cattle” prosecutor. Readers may recall that he filed a lawsuit against the mortgage registry MERS just on the heels of Obama’s announcement that he was forming a mortgage fraud task force. Schneiderman’s joining forces with the Administration killed the attorney general opposition to the settlement, allowing the Administration to put that heinous deal over the finish line. The MERS filing was a useful balm for Schneiderman’s reputation, since it preserved his “tough guy” image, at least for the moment, and allowed his backers to contend that he had outplayed the Administration. [..]

Schneiderman has churned out another lawsuit that the Obama boosters and those unfamiliar with this beat might mistakenly see as impressive. It’s a civil, not criminal suit against JP Morgan he conduct of Bear Stearns in originating and misrepresenting $87 billion of mortgage backed securities (the link takes you to the court filing). And also notice no individuals are being sued. Being a banker apparently means never having to be responsible for your actions.

This suit appears just in time for an “October Surprise” and right before the first debate that will focus on domestic policies. This looks like more campaign PR.

Aug 21 2012

“Foaming the Runway for the Banks”

Disregard all cheery news you hear from the MSM that the housing crisis is over and housing prices are stable and on the rise. It’s not over. We are still bailing out the banks over the troubled homeowner.

“The evidence is overwhelming: home prices are anything but stable.”

Michael Olenick: Still Looking for a Housing Bottom

Two trends are apparent. One is that banks are delaying foreclosures, or not foreclosing at all despite long-term delinquencies. The other is that private equity firms – flush with cash thanks to Tim Geithner’s religious devotion to trickle-down economics and the resulting cascade of corporate welfare – have been bidding up and holding foreclosed houses off the market. These two factors have artificially limited supply and, combined with cheap mortgages rates, driven up prices. While we can debate whether these strategies represent the best public policy, these policies are obviously not long-term sustainable. [..]

Holding back inventory means that the houses that are put on offer sell faster and at higher prices. That creates an incentive to delay foreclosures or not foreclose at all even when a home is delinquent. Though this seems obvious, the mainstream housing finance community – aided by a freelance “housing analyst,” – uses the faster figures to somehow prove banks are not holding houses. [..]

Besides lower foreclosure activity, the government is going all out to give away houses to private equity firms. Recently Fannie Mae sold 275 properties across metro Phoenix in one sale to a mystery buyer, according to a report by Catherine Reagor of the Arizon Republic. [..]

Anybody who has been a landlord seems to quickly tire of it so, assuming there isn’t a pending planned mass immigration to Phoenix, these investors will eventually want to cash out by selling these houses. Further, they will want to minimize maintenance expenses while they are renting out these houses, so the eventual sale of these houses will increase supply and prolong the housing crisis. Geithner’s policy of shaking down Main Street to help Wall Street continues to hurt your street. [..]

Taking account of the delayed foreclosures and the beginning of mass purchases of houses would mean there should be a surge in home prices, but we’re still seeing little movement in many areas. This is especially puzzling given how inexpensive mortgage are. [..]

Of course, this assumes that people can get mortgages for these houses, though many can’t. Young people especially are hopelessly in debt thanks to out-of-control tuition hikes predictably caused by equally out-of-control student loan policies. [..]

Thanks to low lower foreclosures, real-estate speculators buying in bulk, and low interest rates there is enough direct and anecdotal evidence to suggest that we may be seeing a real-estate recovery on paper. Further, these policies are clearly calibrated to bring about a bubble, despite that bubbles are difficult to control and are not, by definition, sustainable: they always eventually pop. Let’s at least hope that when this bubble bursts the new Wall Street bulk buyers are treated with the same ruthless “free market” vigor that the prior owners of these houses were treated with after the last bubble burst. However, I doubt the mystery Asian money buyer, that Fannie sold Phoenix to, will ever be subject to something like the rocket docket.

Washington’s Blog goes down the list of evidence that “the government’s “Homeowner Relief” Programs are disguised bank bailouts … not even AIMED at helping homeowners. It’s a fascinating piece with all the links to this sham.

Former special inspector general overseeing TARP Neil Barofsky (@neilbarofsky) joined Up w/ Chris Hayes to talk about his book “Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street.” Along with panel guests Heather McGhee (@hmcghee), vice president of policy and research at the progressive think tank Demos; Josh Barro (@jbarro), who writes “The Ticker” for Bloomberg View; Michelle Goldberg (@michelleinbklyn), senior contributing writer for Newsweek/Daily Beast; and Up host Chris Hayes (@chrislhayes), Barofsky shares his thoughts on the failure of TARP and the housing crisis.

May 11 2012

Is It Time For Schneiderman To Walk Away From The Task Force?

It may be past time for New York State Attorney General Eric Schneiderman to walk away from Residential Mortage Backed Securities working group (RMBS) and point it out for the sham that it is. It’s just not working and perhaps never was intended to “work”, from Anna Cuevas at Huffington Post:

Not only have they not done anything, they also have no dedicated website, address, or telephone number. Under the arm of the Department of Justice and U.S. Attorney General Eric Holder, the Group planned to have 30 employees within the first few weeks — however, as of this date, the only names associated with the Group are the co-chairs: Lanny Breuer, Stuart Delery, Robert Khuzami, John Walsh, and Eric Schneiderman. While the president deemed that this group would “speed assistance” to homeowners, that assistance has thus far been exceedingly slow or non-existent. [..]

Questions remain and need to be answered. The Residential Mortgage-Backed Securities Working Group is the sixth group formed by the administration to address the foreclosure crisis and provide relief to homeowners. Unfortunately, this group, like the others, is not seeing the urgency of the matter — that is, if they do, in fact, exist and are something more than a public relations announcement. As it appears, the new Residential Mortgage-Backed Securities Working Group is not working — they don’t even have a place to work from.

Schneiderman tried to put a positive spin on this circle jerk but it’s not easing the growing skepticism. From David Dayen at FDL News Desk:

My point on this was always that the President’s appropriation request and $6 will get you a very expensive cup of coffee at my local Intelligentsia cafĂ© (seriously, $6 for a cup of coffee?). Presidential budget requests are as ignored in Washington as pledges to not accept lobbyist money, or marital vows. The request didn’t mean anything, and the House Republicans currently putting together the budget were highly unlikely to honor it.

Sure enough, yesterday, the Justice, Science and Commerce appropriations bill, the proper venue for this additional $55 million request, came up for a vote. Maxine Waters tried to include the appropriation for the RMBS working group. And it failed pretty badly. [..]

there’s no chance that the working group gets anything close to this kind of money for at least 4 months, and in all likelihood not at all.

It’s just another example of how the protestations about the legitimacy of the working group fall apart when subjected to the slightest scrutiny.

At naked capitalism, Yves Smith was even more critical of the task force and Schneiderman’s “performance” on Up with Chris Hayes:

The point is that (Iowa AG Tom) Miller was a convenient stooge for the Administration. His job was to maintain the pretense that the effort he was leading was in the public’s interest and moving ahead at a good clip. These weren’t very easy lies to sell and Miller wasn’t very good at pedaling them, but that didn’t matter much. His job was to keep up a certain level of background noise.

But nothing was going to happen unless the Administration wanted it to happen, and for some reason, the powers that be decided in late 2011 that a mortgage settlement would be a useful election talking point. So they saddled up and pushed the foundering deal over the line.

Now that the Administration has traded up from the unknown Miller to the soi disant “Man the Banks Fear Most” Eric Schneiderman, we have the instructive spectacle of watching Schneiderman look more and more Miller-like with every passing day. Admittedly, Schneiderman is far more skilled at passing off Administration canards than Miller, and is also trusted by many progressives, so he can probably run on brand fumes for quite a while. [..]

Schneiderman may be able to get away with this longer than he should, particularly since the plan is likely to be to file a couple of headline-getting but not-seriously-threatening-to-the-banking-oligarchs cases in the weeks before the election. He seems not to have noticed how the Administration has been quick to cast aside its operatives when they are no longer of use to them. In case he has managed not to notice how he is being played, expect him to have a rude awakening by the election.

Read Yves entire article, it’s a scathingly realistic assessment of the Obama administration, the RMBS (could that abbreviation be more appropriate?) and Schneiderman. If Schneiderman doesn’t walk away from this joke, he will lose what little credibility he has left which, at this point, isn’t much.

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