The much ballyhooed mortgage task force seems to be hewing to the Obama play book of believing that any problem can be solved with better propaganda.
Recall that there has been a great deal of not-very-convincing pushback on the revelation that this initiative has only 50 people working on it, and it’s pretty certain that they are people who were working on existing mortgage-related investigations in various Federal agencies that are simply now reporting to the task force.
The latest tidbit, per Reuters (hat tip Matt L) appears to prove the critics’ dim views:
In addition to the 50 positions the department previously announced, the DOJ is hiring 10 new assistant U.S. attorneys in districts that include Massachusetts and Colorado, according to job listings on the agency’s website.
The department is also hiring five financial analysts and auditors to help understand and identify evidence, the official, who declined to be named, said.
It is also focused on civil laws, including a little-used federal statute called FIRREA, which may make such cases easier to bring.
So we have yet to be completed incremental staffing of a grand total of 15? 65 people pursuing to the biggest consumer fraud in American history, when the savings & loan crisis had 1000 FBI agents tasked to it?
The worst is the insulting five financial analysts. Tell me how “financial analysts” are supposed to get up to speed on securitization. There aren’t that many people who are experts who are willing to educate people going against the banks, and I’d bet big money that the Feds won’t be able to hire anyone of that caliber (they’d make more doing expert witness gigs).
But an even worse sign, the task force appears to be shunning assistance from that very sort of expert. One colleague reported that he has spoken to attorneys who said they were involved with the Schneiderman task force. He has argued that many of the SEC cases filed as civil suits, such as the Goldman and Citigroup CDO cases, could have been brought as criminal cases. Two months ago, they were very eager to speak with him. They’ve since gone radio silent.
Why? The excuse through the grapevine is that the failed Bear Stearns prosecutions show it’s just too hard to prevail on criminal charges. Bollocks. Those suits were badly conceived. The SEC relied on what it thought was decisive evidence in various e-mails. It failed to do enough discovery (critically, enough in the way of depositions of the targets) to find out that the e-mails didn’t necessarily tell the whole story. Those suits failed due to lazy, hasty preparation, and probably also to poor choice of target (the Bear Stearns funds were investors, and thus in many ways victims more than perps).
The real reason is that the Administration has absolutely no interest in pulling hard on the fraud thread and seeing what it unravels. This is an election year and the banks are one of the very biggest donor groups, second only to health care. Obama’s policy is not to look back, and Geithner last week repeated the official mantra that the banks were just hoist on their own petard. How convenient. From The Hill (hat tip Amanda):
Geithner took things a step further, suggesting that it was primarily human nature, not criminal actions, that caused the crisis.
“Rarely is an actual crime a material source of the damage. This is a tragic thing. I wish it were different,” he said. “You cannot legislate away stupidity and risk-taking and greed and recklessness.”
Funny how we don’t accept “human nature” as an excuse for wife-beating, illegal drug use, statutory rape, or embezzlement. But if you are powerful enough to have a Treasury secretary doing your PR, presumably any conduct goes.