“Mortgage Fraud is a Top Priority for This Administration”

By Matt Stoller, the former Senior Policy Advisor to Rep. Alan Grayson and a fellow at the Roosevelt Institute. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller.

Since the President is now establishing yet another committee to look into the mortgage fraud crisis, I figured it would be useful to look into the history of the Obama and Bush administrations’ approaches to the problem of vast financial fraud.  As with most Obama government activities, it’s largely a story of policy continuity with the last administration, though the boom-bust cycle meant that there was not a huge amount of public pressure on the Bush administration to act, so their PR apparatus was less visible.

In 2009, President Obama established the Financial Fraud Enforcement Network, whose purpose was “to hold accountable those who helped bring about the last financial crisis, and to prevent another crisis from happening.”  In the State of the Union, he basically re-established this network, adding a new member, Eric Schneiderman, who has been something of a thorn in the side of the administration.  My guess is that at least one reason (but not the only reason) for agreeing to this is that Schneiderman believes he needs the extra resources to investigate the mortgage crisis.  But the resources of the Federal government have proven useless because the people who are in government are uninterested in and incapable of holding financial interests accountable for their behavior.

I realized this a few months ago, after a fairly irritating email exchange with a college classmate named Sujit Raman, who is now an Assistant US Attorney in Maryland.  Raman is exactly the kind of person you don’t want in public service, a budding corporate ladder climber whose expertise in his young career is about how to standardize deferred prosecution agreements.  So of course he’s an Assistant US Attorney.  When I asked him about his department’s absurd approach to mortgage fraud, he told me with a straight face that mortgage fraud is one of the top priorities of the FBI and the US Attorney’s Office, and referred me to a few cases he had prosecuted of petty crooks (here, here, and here).  I thought it was a bizarre statement, since it’s obviously not true.  But then I went back and looked at the statements from various DOJ and US Attorneys, and they actually think this.

Here’s what I mean.

Mortgage fraud is a top priority for this Administration, especially when public dollars are at stake,” West said in a statement at the time.

Department of Justice official Tony West, July 2009

“The vigorous pursuit of real estate professionals who perpetrated mortgage fraud is a top priority for federal authorities in this region,” U.S. Attorney Lawrence G. Brown said in a statement.

US Attorney Lawrence Brown, Oct, 2009

Mortgage fraud is a top priority for this administration,” said Tony West, Assistant Attorney General for the Department of Justice’s Civil Division. “We will aggressively pursue both individuals and corporations who defraud federal mortgage insurance programs, which are so important to this economy.”

Department of Justice official Tony West, Jan 2010

Dennis K. Burke, U.S. Attorney for the District of Arizona, highlighted the significance of this sentence. “Mortgage fraud is a top priority for the U.S. Justice Department in the District ofArizona, where it has destroyed property values, lending institutions, and entire neighborhoods in our community. No question, complex fraud schemes — a prime example, here — played a role in crashing our real estate market. Culprits like these defendants will be tracked down, prosecuted and convicted. I congratulate the FBI for their thorough investigation that led to this significant sentence.

US Attorney Dennis Burke, March, 2010

“The prosecution of those who commit mortgage fraud is a top priority of the Department of Justice and this U.S. Attorney’s Office,” said U.S. Attorney David Gaouette. “Those who commit such crimes seriously erode the confidence of financial institutions to lend money which is a key element of the future strength of our economy.”

U.S. Attorney David Gaouette April, 2010

U.S. Attorney Wifredo “Willy” Ferrer, who was sworn in two weeks ago as the top federal prosecutor for the Southern District of Florida, called fighting mortgage fraud one of his top priorities today during a session with journalists.

Combating fraud was one of three main priorities Ferrer vowed to pursue, following terrorism and public corruption.

“There is rampant fraud in South Florida,” he said. “I think that’s unfortunate. It is embarrassing that we are known in some circles as the fraud capital of the country. I don’t like that title.”

US Attorney Wilfredo Ferrer, Southern District of Florida, May, 2010

“The investigation and prosecution of mortgage fraud is a top priority of the Justice Department and this office,” said U.S. Attorney John Walsh. “Prosecuting these cases helps protect the integrity of the housing market.”

US Attorney John Walsh, Jan 2011

And prior to the Obama administration years, the Bush US Attorney network and FBI adopted the same posture.  Here are two examples.

“We all have the same initiatives, the policies all come from Washington, D.C., and right now mortgage fraud is No. 1,” Becky Gregory, the Beaumont-based U.S. Attorney for the Eastern District of Texas, told about 50 lawyers munching their boxed lunches during a white-collar crime seminar at South Texas College of Law.

“On the local level lots of times, the big companies are the victims,”said Johnny Sutton, the San Antonio-based U.S. Attorney for the Western District of Texas. Sutton said the FBI is finding a lot of people who illegally took advantage of the lax mortgage system. He said his office just prosecuted 19 defendants in an Austin mortgage fraud case.

Richard Roper, the Dallas-based U.S. Attorney for the Northern District of Texas, said the coming mortgage fraud cases remind him of the bank fraud cases of the late 1980s.

“It’s going to be huge in the next few years,” he said.

Donald DeGabrielle, the Houston-based U.S. Attorney for the Southern District of Texas, told the gathered group of mostly criminal defense attorneys that “there will be a lot of work for you.”

US Attorneys Becky Gregory, Johnny Sutton, Richard Roper, Donald DeGabrielle, July, 2008

Reiterating his comments at the summit, Swecker told attendees that mortgage fraud is a top priority for the FBI, and “prevention of mortgage fraud should be our collective goals. It is vital that policy makers, law enforcement and the public understand the reality and magnitude of the problem and work together to address this issue.”

Assistant Director of the FBI’s Criminal Investigative Division Chris Swecker, March, 2005

I would be happy to be wrong, of course.  I’d love to see real prosecutions of the people that caused the mortgage crisis and rigged the markets to collapse.  But it’s important to recognize that it is the policy of the Bush and Obama administrations to protect the banks at all costs.  That is, not prosecuting isn’t a failure, it’s a feature.  Don’t believe me, believe Barack Obama, who said so in his very first State of the Union.

We will act with the full force of the federal government to ensure that the major banks that Americans depend on have enough confidence and enough money to lend even in more difficult times.  And when we learn that a major bank has serious problems, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy.

That’s the policy.  Oh, and that bit about holding those responsible accountable – didn’t you hear that mortgage fraud is a top priority of the administration?

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About Matt Stoller

From 2011-2012, Matt was a fellow at the Roosevelt Institute. He contributed to Politico, Alternet, Salon, The Nation and Reuters, focusing on the intersection of foreclosures, the financial system, and political corruption. In 2012, he starred in “Brand X with Russell Brand” on the FX network, and was a writer and consultant for the show. He has also produced for MSNBC’s The Dylan Ratigan Show. From 2009-2010, he worked as Senior Policy Advisor for Congressman Alan Grayson. You can follow him on Twitter at @matthewstoller.


  1. fresno dan

    “Mortgage Fraud is a Top Priority for This Administration”

    Ha Ha Ha Ha
    OUCH! I hurt myself laughing. Well, I have been thinking that NC is way too serious, so its good to have some comic relief. I’m looking forward to a skit on Rommney’s taxes being too high….

    1. James

      It’s great what lack of sleep will do to you. I first read the title “Mortgage Fraud is a Top Priority for This Administration,” took it literally, and was totally nonplussed. As in, so, I see that Obama has stepped it up a notch now. Rather than merely ignoring criminal activity for his second term, he’s announcing their intention to actively participate in some of their own this time around.

      Funny that after 4 full years we’re only now talking about any of this. But of course that was the plan all along, now wasn’t it? So blatantly criminal that all you can do is shake your head and laugh.

    2. Wendy

      With respect, I think Mr. Stoller may be hearing them wrong. They really do mean mortgage fraud is a top priority, however when they use that term they are referring to the little people, the ones who got mortgages they shouldn’t have, and probably also those organized mortgage-fraud enterprises, like Wayne Puff/NJ Affordable Homes in NJ.

      This administration views the banks as the VICTIMS of mortgage fraud. That’s why it’s a top priority, to right the wrongs done to their friends and compatriots.

  2. SteveA

    But the Republican Congress stopped Obama from prosecuting mortgage fraud! Plus, he was busy killing Osama bin Laden!

    Obama: the hilarity of hope.

  3. Richard Kline

    “Mortgage fraud is a top priority of this election cycle.” There, got that wrapped up for you.

    —By which was meant ‘a priority for the top of the newscast’ pursued ‘for the duration of this election cycle.’ After which the top priorty will be changing the law retroactively on ‘mortgage uncertainty’ so that ‘fraud’ is no longer a problem, for the legal system of the Man’s System. Honestly, I can’t believe that any one buys for a second the vapor that emerges from Barack Flimflama’s piehole. He’s had years to do something, and we’ve very well seen what he’s chosen to do and who for. And prosecuting mortgage and security fraud have been absolutely NOT anything that this Administration or the next one does. Blowing smoke up the media’s wallet cracks _is_ very much what this Administration does, is doing, and will continue to do. Along with artlessly blowing up distant acres of SW Asia. If anybody wants that, then vote for it, ’cause it’s all yer gonna get.

    1. Dirk77

      Yes, actions speak louder than words. People have three years of hard evidence of what Obama is about. What he says is relevant only if in the past his actions were consistent with his words, which is overwhelmingly—and obviously—not true. That anyone at this stage is taking seriously anything he says is beyond me. Is there some disease going around that I missed? I just don’t understand most people.

      1. René

        It runs really deep. You can’t blame most of the people, they are conditioned and trained like a dog.

        Most people fight, resist and hate the truth because truth demands change.

        The whole system is a lie. How can you discover America if the land was already inhabited?

        1. Tom Parsons

          I’ve always wanted to similarly “discover” the local *Bank* of America, rename it and claim it. Same logic, except that the defenders have guns and computers and a bigger gang. So much for logic.

      2. Maximilien

        Dirk77: “Is there some disease going around that I missed? I just don’t understand most people.”

        Most people are optimistic. Rational optimism is hope. It’s a good thing. (Otherwise, can you imagine the lineups at bridges and entrances to tall buildings.)

        Irrational optimism is merely the hope for hope. It is simply a mechanism for denying overwhelming evidence to the contrary, for denying the obvious. When sufferers discover their hope is no longer rational, they resort to hope that is irrational. In other words, hope for hope. The very seriously ill and desperate will even go so far as to hope for hope for hope.

        Irrational optimism is the disease I think you’re looking for, Dirk. It is a psychopathology of apparently epidemic proportions, and is closely related to masochism, the desire to inflict physical and emotional pain on one’s self. I believe it goes a long way to explaining the blind and deaf loyalty of those who still support Obama in spite of everything he hasn’t done.

        (Btw, I am not a psychiatrist. I am not even a physician. Readers who think they fit the diagnosis contained herein should consult a doctor.)

        1. southpaugh

          It would be very interesting to see literature or other indications on how you derived your theory. It smacks of truth, and would be worthy of actual study if it hasn’t already been pursued. Meanwhile, you might be interested in “The Science of Evil” by Simon Baron-Cohen. It’s about emapthy, or the lack thereof, and “empathy center” brain function among average people compared to those who are quantifiably Zero-Negative on the Empathy Quotient scale. Hope is examined as a function of empathy, quantified and qualified through measured brain activity. Fascinating stuff.

    2. Doug Terpstra

      Aiding and abetting mortgage fraud has been this adminstration’s top priority for three years now, right from the start.

  4. Jim3981

    In The Warning, veteran FRONTLINE producer Michael Kirk unearths the hidden history of the nation’s worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.

    “I didn’t know Brooksley Born,” says former SEC Chairman Arthur Levitt, a member of President Clinton’s powerful Working Group on Financial Markets. “I was told that she was irascible, difficult, stubborn, unreasonable.” Levitt explains how the other principals of the Working Group — former Fed Chairman Alan Greenspan and former Treasury Secretary Robert Rubin — convinced him that Born’s attempt to regulate the risky derivatives market could lead to financial turmoil, a conclusion he now believes was “clearly a mistake.”

    Born’s battle behind closed doors was epic, Kirk finds. The members of the President’s Working Group vehemently opposed regulation — especially when proposed by a Washington outsider like Born.

    “I walk into Brooksley’s office one day; the blood has drained from her face,” says Michael Greenberger, a former top official at the CFTC who worked closely with Born. “She’s hanging up the telephone; she says to me: ‘That was [former Assistant Treasury Secretary] Larry Summers. He says, “You’re going to cause the worst financial crisis since the end of World War II.”… [He says he has] 13 bankers in his office who informed him of this. Stop, right away. No more.'”

    Greenspan, Rubin and Summers ultimately prevailed on Congress to stop Born and limit future regulation of derivatives. “Born faced a formidable struggle pushing for regulation at a time when the stock market was booming,” Kirk says. “Alan Greenspan was the maestro, and both parties in Washington were united in a belief that the markets would take care of themselves.”

    Now, with many of the same men who shut down Born in key positions in the Obama administration, The Warning reveals the complicated politics that led to this crisis and what it may say about current attempts to prevent the next one.

    “It’ll happen again if we don’t take the appropriate steps,” Born warns. “There will be significant financial downturns and disasters attributed to this regulatory gap over and over until we learn from experience.”


    1. Jim3981

      Sorry the post is slightly off topic, but the excellent video identifies the CORE criminals that got the ball rolling.

      1. Fiver

        The Clinton Admin heralded the completed, total corruption of the Democratic Party. The 1 person with class (Born) gets beaten to a pulp while the rest rake in millions and set the US AND global economies up for a total disaster. Whenever I hear some fool pining for the ’90’s I just despair.

        1. jwbeene

          The main issues are correcting our debt currency and vetting the president to be. Because those who really finance the presidential campaigns could care less which party is elected. Only that whoever wins the presidency continues the present policies of the past 40 years.

    2. Francois T

      A crucial complement to The Warning is the must listen interview Professor Bill Black gave to Harry Schearer (Le Show, 01-May-2011) In it, he explains clearly and mercilessly the mechanism of systemic fraud that took place. In any true democracy where the press is not the bastard child of a mega-corporation, this interview would have made the bankers lose their job and force the President to prosecute the greedy bastards, or be impeached, no less.

      But this is the US of A circa 2012, the newest member of the Banana Republic Club, the Emporium of crony capitalism.

      Of course, said interview is best listened to after our very Yves was on Le Show earlier

      One thing is absolutely sure: It is not Brotha Obysmal who will do anything to reinstate the rule of law in this country.

  5. Aaron Layman

    Awesome piece Matt! Fabulous that someone found written evidence of the teleprompter’s real policy. I guess we shouldnt’ be surprised that the evidence was sitting in front of us all along (in his very first SOTU speech!)

    Appreciated the comments from Texas officials. I’ve been checking the AG’s website and calling periodically. Seems like they are perfectly comfortable frying small fish and nothing else.

  6. ex-PFC Chuck

    My guess is that at least one reason (but not the only reason) for agreeing to this is that Schneiderman believes he needs the extra resources to investigate the mortgage crisis.

    I lean toward the compromising photos theory.

  7. sleeper

    This is no surprise.

    The clear intent as shown by the actions of federal law enforcement, federal regulatory bodies, and the congress is to protect the 13 banks. The banks have the gold and they make the rules.

    This is why Obama is so proud of his drone attacks and military raids. These are action items he actually pursues and can do so with a clear chance of success.

    1. Walter Wit Man

      Oh hey, great minds think alike. I provided a similar link below but you beat me to it. Missed it the first time.

  8. Mr. Coughsalot

    “Mortgage fraud is a top priority of this administration.”

    Actually, the statement is completely correct. We’re just foolishly assuming the implication is stopping the fraud rather than furthering it.

    1. Blue Meme


      Just as we naively thought “yes we can” meant “yes we can restore civil liberties and the rule of law,” we heard what we wanted to hear.

      No more.

  9. CaitlinO

    Perhaps the more telling statements from Obama were from the interview with Jake Tapper last October that bank activities “weren’t necessarily against the law,” “Banks . . . find loopholes,” “a lot of that stuff wasn’t necessarily illegal, it was just immoral or inappropriate or reckless.”

    When the Lawman-In-Chief has already investigated, indicted, tried and found the banksters not guilty, the junior lawmen know it’s time to fall in line.

    1. Walter Wit Man

      Exactly. Good catch.

      This statement is Obama’s real position. This is the conclusion the “investigators” have already found and the conclusion that future “investigators” are expected to find.

      Obama let it slip.

      But now he’s trying to have it both ways by saying that he is going to go after crime and abuses.

      What is it Mr. President? Were no crimes committed or are you going to go after crimes?

  10. Psychoanalystus

    “Mortgage Fraud is a Top Priority for This Administration”

    I take that means Droner himself will try to make a killing in the lucrative industry of perpetrating mortgage fraud on average suckers?

  11. Middle Seaman

    There is small doubt that the whole Obama administration is highly convinced that they are tough on mortgage and financial fraud. The paranoid is convinced that people are after him, the suicide bomber is going to heaven and Obama’s rabid supporters see him as better than FDR (or almost).

    Both Bush and Obama are delusional presidents. Bush invented his own reality and his supporters tried to convince everyone that this alternate reality is the only one that matters. Obama came in with a mental problem called post-partisanship. That is alternate reality. When serious people heard about it first, they were appaled. Obama’s unlimited support of the banks was and is based on the delusion that banks are the most important, financially and morally, institutions in a modern society.

    Whoever wins the presidential race in 2012 will suffer from the same mental disease.

  12. Doug Guillory

    The only thing more funny than the assertion that mortgage fraud is a priority is the Republicans using this to claim that Obama is anti-business, way beyond any Kafka craziness.

      1. Jil

        Walter Wit Man,

        The propaganda does work. It works very well. Do you have an explanation as to why it works so well, even a partial explanation?

        I have never seen anything like this before. Things that are the opposite of reality, things that make no sense at all are accepted as perfectly normal and true.

        1. southpaugh

          I referenced the book “The Science of Evil” by Simon Baron-Cohen that touches on how such propaganda, or rather, the mindset that creates the fertile ground that promotes the success of such propaganda. It’s a combination of brain function set by genetics/gestation environment/social environment which is all abetted by social peer pressure. Scientific proof provided.

  13. Dave Angle

    If you read the “top priority” statements closely, you see that what these shills are saying is they take low level fraud as a “top priority”. Phrases like “real estate professionals” and “erode the confidence of financial institutions to lend money” reveal that these feds are saying they will vigorously prosecute bogus appraisers, rehab fraudsters and straw party participants. Those scams are worthy of prosecution but are obviously small potatoes and unworthy of federal prosecutor prioritization. These “top priority” statements are a rouse designed to be technically truthful but deceptive in that most folks get a different meaning from the words.

  14. killben

    I am sure it does not take much to understand that the State of Union Address for purly an election gimmick for the sake of gullible public for Obama. Oh my, if Obama had any intention of doing anything wouldn’t you agree that he would have been half way through it by now. Obama is interested in only one thing … getting 4 more years in the White House.

    One thing I doff my hatt to Obama for .. he knows how to win elections…

    If I ever stand for elections I would like to hire persons with Obamasque qualities to manaeg my elections!

    1. southpaugh

      Okay, so what, exactly, would you suggest as an alternative. Would the oppostion provide better gratification for your outrage? How involved have you personally been in voicing your concerns to the White House, AG Holder, your Congressman or Senator. The banks have the ear of all these people on a daily basis and can only be overcome with concerted, focused and unrelenting pressure from concerned citizens who receive the filty end of the stick in return for our complacent silence. If you don’t pressure these guys in between election days, you’ve only delivered the very least among your responsibilities.

  15. Abigail Caplovitz Field

    Great post Matt. Relatedly, see my post from a couple weeks ago, excerpt (links in original):

    Here’s what I mean about small and medium fish: Justice considers 14 people who scammed $47 million using 22 Florida properties a “Large-Scale Mortgage Fraud Conspiracy” and $23 million in fraudulent loans for 44 NY properties a ”Massive Mortgage Fraud Scheme“. If those cases are “large scale” and “massive”, what’s the appropriate superlative to talk about the mortgage fraud conspiracy at Countrywide or WaMu or any of the others? What superlative would Justice use if it convicted their executives? SuperMegaGigantoNormous Fraud?

    whole piece here: http://abigailcfield.com/?p=686

    Or see today’s, in part about Schneiderman’s gambit: http://abigailcfield.com/?p=845

    1. SteveDallas

      Read the book back when and read all his (and James Kwak’s) articles at BaselineScenario for at least a year. Don’t know if in the past year they’ve changed their tune but I gave up on them because they aggressively maintained the “nothing was illegal” meme.

      When Joseph Stiglitz finally changed his tune and started admitting that the system is corrupt and riddled with crime, then I concluded that Johnson and Kwak were captured and consciously providing cover for the criminals. For me, by maintaining his political correctness (i.e. not calling criminals criminals) Johnson totally forfeited his integrity and credibility. Kwak is MUCH worse, I was always surprised that Johnson even associated with such a blatant pro-corporatist shill.

      Moving forward I’m looking mostly for details about what the criminals are doing, how they’re doing it, how to stop them, how to take back their criminal gains, and how to punish them so severely that they drown in regret and beg for mercy.

  16. lambert strether

    Warn me to put my coffee down, OK?

    As others have commented, the nice thing about the “Mortgage fraud is a top priority…” talking point is the no doubt calculated ambiguity as to whether prosecuting, enabling, or committing mortgage fraud is the top priority. By now, we know the answer. Corrupt language, corrupt policy.

    Oh, and “they actually double-think this.” Fixed it for ya.

  17. Gil Gamesh

    Hey, you all surely know Eric Holders nickname? Nolle Pros, they call him. Americans will no doubt have learned their lesson: never elect a Harvard lawyer president. Oh, never mind……

  18. Joe Gaffney

    It seems to me, from reading the above statements, that these people are trying to divert attention from the real culprits to some (practically) fictional culprits. Realtors didn’t create the securitization schemes. Mortgage brokers didn’t either; nor did buyers acting in some sort of feigned “bad faith” schemata.

    The President, and the above-quoted politicians, are either mis-aprehending the real fault, or straw-manning. The rest of the real world knows that certain sectors of Wall Street and a number of mega-mortgage)banks are the real culprits. I believe the latter.

    1. Walter Wit Man

      Check out the story I link to below where the government went after the borrower of a liar loan and put him in jail and made him pay restitution to Countrywide. Meanwhile, the mortgage broker got a lighter criminal sentence and Mozilla and Countrywide got no criminal charges but paid a small civil fine.

  19. Beth

    Keep saying it and that makes it true, right? I think the problems is in their definition of “mortgage fraud” which seems to encompass a few penny ante street hustler scams. They don’t look at what the banks (servicers) and the MBS-underwriting investment banks and GSEs activities as “mortgage fraud”

  20. Walter Wit Man

    The administration and state AGs have indeed prosecuted low level fraud. But just the small guys.

    In California, the mortgage fraud cases I’m aware of involve mostly small time, mostly ‘ethnic’ mortgage brokers who were pushing the liar loans in local communities. This is the way the fraud was designed, imho. The big boys set up the inducements so that small time brokers would steer people into bad loans and encouraged them to commit fraud. Then the big boy bankers can look the other way.

    Also, don’t forget this case the feds prosecuted: http://www.nytimes.com/2011/03/26/business/26nocera.html?pagewanted=all

    An IRS agent was watching a documentary about ultra running and decided to investigate a dude he saw in the film. In the end, he and other officers went undercover and got the guy to admit that he lied on his mortgage loan application.

    Kind of funny that some agent does all this on a whim but the feds haven’t done any wiretaps or sting operations on the big boys, that I’m aware of (maybe they have but they’re innocent-ha).

    1. Walter Wit Man

      And hey, look! The NYTimes story includes the same Obama Justice Department punch line that Matt has identified:

      “The Department of Justice has made prosecuting financial crimes, including mortgage fraud, a high priority,” said Neil H. MacBride, the United States attorney for the Eastern District of Virginia, in a statement. (Mr. MacBride, whose office prosecuted Mr. Engle, declined to be interviewed.)

  21. timotheus

    What is really depressing is how well this Schneiderman appointment is selling among the so-called progressive blogosphere. I am getting sick of triumphant messages from all these groups who usually are a bit more circumspect. But this time they have glugged the Kool-aid with gusto.

  22. Hugh

    There was always great distance between Obama’s rhetoric and his actions. Indeed as experience has taught us the distance is not only great but Orwellian. That is Obama does the polar opposite of what he says. So when he states that mortgage fraud is a top priority of his Administration, the underlying message backed up by 3 years of inaction is that its prosecution has zero priority, and that far from any interest in protecting ordinary Americans his only purpose remains the protection of the banks, and the rich who stand behind them.

  23. Walter Wit Man

    I broke a rule of mine and went to Daily Kos to see what the Democratic party propaganda was. And guess what?

    Mike Lux says it’s too early to declare victory, but pretty much declares victory anyway:

    “But it increasingly is looking like we may finally be in a position to start winning some big victories against the big banks. And with the developments of this week and the appointment of Richard Cordray at the CFPB, it also increasingly looks like Barack Obama is going to have some real credibility to run against Wall Street.”


    1. Walter Wit Man

      It is interesting to see that the politicians are leaking the details of their “negotiations” to Daily Kos.

      Lux reports that the release of liability is narrower than some thought, or something . . .

      Lux is being suckered and isn’t presenting this information in context.

      First, let’s see some detail about the tolling of the statutes of limitations. The banks signed tolling agreements while they’ve been negotiating. Were ALL claims against the banks tolled, or just the robo signing claims? If not, many of those claims are already barred by the statute of limitations so it doesn’t matter if the release is narrow or not–they are already off the hook.

      I don’t really know the answer to all this and I’m just speculating with the information I have. Lux is evidently in the know and connected but I heavily distrust his motivation. He’s spinning these details in a pro administration light rather than providing context.

      I want him to report on the tolling agreements. Are these public?

    2. Walter Wit Man

      This is what Lux reports as the current version of the release of liability:

      “1. No release on any fair housing, fair lending, or civil rights claims.
      2. No release on any Federal Housing Finance Agency or Government-Sponsored Enterprise claims.
      3. No release on any Consumer Financial Protection Bureau claims (which would admittedly be modest, since the Bureau was only established in July 2011).
      4. No release on tax liability claims.
      5. No release on criminal liability claims.
      6. No release on SEC claims.
      7. No release on National Credit Union Association claims.
      8. No release on FDIC claims.
      9. No release on Federal Reserve claims.
      10. No release on the “vast majority” of origination claims.
      11. No release on the “vast majority” of securitization claims, including all claims of state pension funds.
      12. No release on legal liability surrounding Mortgage Electronic Registration Systems (MERS).”

      1. Walter Wit Man

        As someone pointed out at Daily Kos (I couldn’t stop myself from reading the comments–they were as bad as I thought), t doesn’t matter if the AGs release some of these claims or not–they are not the AG’s claims to be released–they are individual citizen claims to be released (granted, some of these claims may allow either the AG or citizens to bring suit).

        Also, many of these claims are federal claims that the are not in the state AG’s jurisdiction. So what is the point of having them release liability for something they never had jurisdiction to bring in the first case?

        Jeez, the more I look at this “no release of liability” press release the more I see it as pure propaganda.

  24. DeadlyClear

    The focus is petty mortgage fraud, but as my FBI source revealed – there is no money to go after the big fish. The banks use the mortgage brokers and the borrowers to deflect the role of the cartel. The “mis-perceptions” slathered on by the bank brainwashing need to be dispelled. But we have a Congress that apparently has been complicit all the way to allowing their families to be woo’d by the banks and in their employ – that’s why there was no applause with the announcement of the new task force anywhere but in your living room… And what you heard from Congress was them holding their breath. See http://www.deadlyclear.com – “Reality of Mis-perceptions”

  25. skinla

    On several occasions Yves has pointed out that California Attorney General Kamala Harris seems shaky in fighting bankers. The Department of Justice official TONY WEST quoted in this post is brother in law of Calif AG Harris. Everyday Tony West must be feeding Obama’s pro banker koolaid to Kamala Harris. It is no wonder that Harris has not been punching bankers hard enough.


  26. kravitz

    I think they meant ‘winning California is a top priority for this administration’ except Kamela Harris has opted out of being bought.

  27. Mel

    What can I add? Yes, you can see the administration up in the bleachers cheering:
    “Mortgage Fraud! Number One!”
    “Mortgage Fraud! Number One!”

    Here’s something. Somebody could make a batch of those foam plastic cheering hands with pointy fingers and the slogan. “Mortgage Fraud #1”

    If you made them in the U.S. it would be a valuable stimulus to the foam plastic cheering hands industry, and help a few cheering hands industry workers pay their way.

    If you mailed them to the White House and Congress via USPS it would help dig the Postal Service out of a nasty hole.


  28. beowulf

    As always Matt, excellent piece.

    Clearly “mortgage fraud” is GovernmentSpeak for borrower fraud. I leave it to the reader to decide if our Nation’s leaders are covering up lender fraud or if they are too dim-witted to understand that its even possible (if the bank sells its liar loans, it defraud investors; if the bank holds them itself, it defrauds the FDIC).

  29. Walter Wit Man

    One major reason the banks may* be willing to settle the robo-signing claims is it takes pressure off of them under the one theory where the big boys have the most criminal liability.

    Robosigning created the biggest [potential] criminal liability not because these crimes are so much worse than the other crimes (in fact, the liar loans probably had a more destructive societal impact), it’s just that these crimes are probably the easiest to pursue and prove.

    Can someone tell me why the robo signers have not been indicted? Did these people not commit a crime in any of the states? Wouldn’t it be really easy to start marching up the chain if the lower level people are indicted? Then the prosecutors would have no excuse but to go after the people that designed this scheme. Someone designed this scheme–these were not a bunch of random robots that all of a sudden appeared out of nowhere.

    Maybe there is a legitimate theory as to why these robosingers didn’t commit a crime–I would like to hear it–but even if it is a close call when has that ever stopped prosecutors from pursuing someone they really want to pursue? Simply look at the way prosecutors treat Barry Bonds or average home buyers or young black men if you want to see prosecutorial zeal.

    Here is one California law on forgery: http://law.onecle.com/california/penal/470.html

    “Every person who, with the intent to defraud, knowing that he or she has no authority to do so, signs the name of another person or of a fictitious person to any of the items listed in subdivision (d) . . . or forges the seal or handwriting of another. . . . [or] falsifies any record of any will, codicil, conveyance, or other instrument,the record of which is by law evidence . . . [or] falsely makes,
    alters, forges, or counterfeits, utters, publishes, passes or attempts or offers to pass, as true and genuine . . . promissory note [etc.]. . . is guilty of forgery.”

    Why isn’t this a slam dunk?

    *This, as well as all my other musings are simply that–musings based on public information–speculation about public concerns.

  30. Walter Wit Man

    Re Mike Lux reporting on the release from liability being “narrow” . . . uh, how is this a victory?

    Seriously. Why are some lefties once again even allowing themselves to express satisfaction that the agreement was limited or slowed?

    Even assuming the language was narrowed, the whole thing is a diversion from real justice! Why give them credit for dialing back the diversion a bit? Especially when they are simply making the same empty promises they’ve been making for years! They got caught red handed trying to slip a sweetheart deal by (as much immunity as possible but only paying for the robo-signing claims) and we are going to give them credit for dialing it back a bit after they were caught?


    Plus, I don’t buy this cover story. How do we know the language got narrowed recently. This whole process has been press releases and lies.

    They were really negotiating over whether to include that above list of 10 things in the release of liability? Why? What’s to discuss? The AGs don’t have the power to release liability for all that.

    The banks are being disingenuous if they are insisting on this release language. What does it get them? Surely the State AGs or the SEC or the Federal Reserve know they are not bound by the state AG settlement agreement with the banks.

    1. Walter Wit Man

      That should be . . . Surely the State AGs know that the SEC or the Federal Reserve, etc., are not bound by the state AG settlement agreement with the banks.

  31. Valissa

    A great example of governing by group think, messaging and PowerPoint. Attend meeting, note key points and assign to underlings. Rinse, repeat. Of course by the time the action items get down to the lower levels of government, the people at that level can’t go up agaisnt the elites… they’re too busy trying to keep their job and get ahead.

  32. Fiver

    Obama’s whole life is a study in how to frame grotesque disparities in the fairness of outcomes for the objects of his actions “splitting the difference”. There is not a junk-legalistic fence anywhere in his ambit he has not come down from on the side of existing power as against the public interest and out he strolls to deliver this turd like some sort of used-lawyer guy’s commercial everyone’s ready to heave over – just look at how far the Republicans had to go to throw this election and somehow make him look like the “lesser of” choice.

  33. Don Lowell

    I’d like to see a statue of Ms. Born next to the Washington Monument.

    I’d like to see Summer’s and Greenspan sent to Jupiter. One way!

  34. Joe Gaffney

    Upon second-thought, it’s not robo-signers, mortgage brokers, realtors, prime and sub-prime lenders (if any remain) that are the culprits – it’s our politicians, in Washington. They’re the ones who held guns to the heads of Fannie and Freddie execs to “serve the under-served.” Now, how else can a GSE or sub-prime lender (mortgage banker) keep the promise to “serve the under-served” except by cooking up a scheme that produces lots of cash (for loans) and eliminates financial liability (for making all of those un-qualified loans)?

    Politicians are the culprits – and, we schlubs are depending upon them to help us? I don’t think that the politicians want us to know (or, find out) that they “caused” this crisis. The once-poor bankers had to go along, at first, then discovered that our own government empowered them to fleece the rest of us!

    All of this shifting and blaming of minor players, is meaningless. It takes our eyes off of the “real” targets of our country’s financial melt-down. It answers the question, “Why has nothing (of any real significance) been done?”

    In the mean time, Real Citizens Suffer – and I mean, significantly suffer. Our own government created this debacle. And, there’s “nothing” we can do about it – except flail around at less than minor targets for our anger!

    1. Joe Gaffney

      What we need to do is to find out who these government officials (politicians like Barney Frank) are and have them incarcerated. I’m sure that there are numerous “employees,” and ex-employees, of the GSE’s, and other lenders’, that may be more than willing to spill the beans.

    2. F. Beard

      They’re the ones who held guns to the heads of Fannie and Freddie execs to “serve the under-served.” Joe Gaffney

      So only the non-poor should have access to loans from the government backed/enforced counterfeiting cartel, the banking system? And politicians are to blame for accommodating the desires of the poor to not be left behind?

      1. Joe Gaffney

        You have correctly summed it up.

        Subsequently, because the securitization scheme was created, only small, local banks could continue doing business the way it used to be done. Once the big lenders were lending out this securitization-derived money, they had no choice but to continue to lend on that same basis. Why? Because they didn’t have any money themselves and had to keep up with the demand.

        Remember, the securitized bundles of mortgages had to have decent average potential yields and moderated credit standards. So, lower credit buyers were packaged with higher credit buyers thereby increasing the credit averages.

    3. Fiver

      Wall Street OWNS the government. It is PRECISELY the banksters and their mega-corporate fellow sleazeballs that hijacked the system. Do NOT blame “Government”. Blame stupefying levels of corruption of both political parties funded by Wall Street.

      It’s up to the people to take the Government back via the ballot box, or, given that is currently impossible due to the degree of corruption, take the fight directly to Wall Street. There are literally thousands of senior corporate officers (and government regulators and numerous elected officials) who belong in jail. The scope of this fraud, and the damaged caused all over the world, is unprecedented. Either take government back, or what’s coming in a few short years is going to make what we see now look like a picnic.

  35. Joe Gaffney

    It’s hard to believe that our own government did this to us. Well, to be fair, not everyone in government – only the rankest ranking members of our own government, most of whom got sweetheart loan deals from the GSE’s, et al.

    Let us get this through our heads once and for all, our own government did this to us. If bankers go to prison, that is a travestry beyond imagination.

    There has always been minor fraudsters hoovering around the mortgage industry just as there are around any indutry. They may cause 1 percent (or, maybe even 2%) of the fraud exposed. But, they do not cause (and, did not cause) this huge harm to the nation’s economy.

    One more time: it was our own government. Now all I’d like to know is which ones.

  36. Joe Gaffney

    “Non-poor” is probably the wrong hyphenated word to use here. What it should be is, “credit-worthy.” If it happens that “credit-worthy” translates into “non-poor,” well, be that as it may. The issue of poverty is a different issue. It needs a different solution, or stack of solutions.

    But, I don’t we’ll see any of that forthcoming. This country runs on the backs of the poor (and, middle class). Perhaps you have some solution for a country with 130,000,000 working-class members – all needing to live and eat?

    My first step would be to take a look at the government schemers, those who seem to have found various ways of gathering up lots on money without having to do anything productive or legal, and stop them.

    1. F. Beard

      What it should be is, “credit-worthy.” Joe Gaffney

      No one is “worthy” of stolen purchasing power, my exact point.

      Perhaps you have some solution for a country with 130,000,000 working-class members – all needing to live and eat? Joe Gaffney


      1) Ban further credit creation. Henceforth only genuine loans are to be legal.

      2) Bailout the entire population (including non-debtors) equally at a rate metered to just replace existing credit as it is repaid. Continue till all credit debt is paid off.

      3) Allow genuine private money alternatives after the bailout period to meet the economy’s need for money in the absence of government backed “credit”.

      1. Joe Gaffney

        “No one is “worthy” of stolen purchasing power, my exact point.” – F. Beard

        Can you explain this to me? You may just have a great point, but it’s a bit obtuse.


        1) Ban further credit creation. Henceforth only genuine loans are to be legal.”

        By “credit creation” do you mean, “non-traditional or abnormal forms?”

        “2) Bailout the entire population (including non-debtors) equally at a rate metered to just replace existing credit as it is repaid. Continue till all credit debt is paid off.”

        With what money?

        “3) Allow genuine private money alternatives after the bailout period to meet the economy’s need for money in the absence of government backed “credit”.”

        The argument opposed to this is that there would not be enough capital to fund the demand. We would have an ever-swelling, ever-heating-up population demanding equality and possibly “parity.” Your point is a good one, but, it may be naive in this real world.

  37. DanJS

    Please!!! Where is “Mom” when she’s needed? Watch the words you allowed to be used in your homes and neighborhoods! What you say is what you get!

    “Mortgage Fraud” is a long-established criminal act that must always be severely prosecuted.

    Our most pressing national mortgage-related problem is not mortgage fraud, but “Foreclosure Fraud”!

    We must re-frame the task of the “President’s Working Group.” They must be told that “Mortgage Fraud” is not the foremost priority desired by the Homeowners/Voters of America. What must be targeted as the highest priority is Foreclosure Fraud!

    In every communication we initiate, those who are involved with this issue must clearly state the words “Foreclosure Fraud”!

    My favorite discriptor is “Fraudclosure,” but the nomenclature of the this vital issue must be re-framed to stipulate what the issue is.

    Otherwise, millions of Americans will ultimately lose years of the fruits of their labors to theft by thieves and scoundrels.

    Words are vitally important. Ayn Rand stated “Words have meaning!” The words we use daily direct the argument we are making.

    Just as the banksters public relations folks have effectively created the proposition that there were thousands of people who created “Liars Loans” to “Get Mortgages They Could not afford, we must consitently counter with accurate words the notion that it is the homeowners who “Just want to get a free house!”

    Repeat with vigor that it is the banksters who “want a free house!” ..So much, in fact, that they intentionally engineered a system designed to create unjust results.

    The very idea that a tryer of facts, any judge, would proclaim that the bank may proceed when no legally certain, verifiable proof of “standing to forward a legal case” exists by the foreclosing party! Any judge that permits perjury in his or her court should be re-called by the citizen homeowners of his or her jurisdiction.

    Where are the cases being filed that will hold judges accountable to the law they are sworn to ajudicate?

    And… for the millions of homeowners who live in “non-judicial states”… the real estate law of every state that prevent judicial review of foreclosure by local courts… those state laws must be overturned.

    Indeed, “non-judicial foreclosure” was the first, foundational step of the banksters and Wall-streeters who engineered engineered massive, unregulated, residential mortgages securitization, and the “MERS-Machine” that enabled the massive Ponzi scheme that must be unraveled!

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