Bear with me while I tell you a story from the 1980s. The early years of of our New Gilded Age at least offered good theater for the minions. Institutional Investor was then an entertaining read, chronicling the outsized, colorful, and often off beam personalities of the takeover boom. Do we have any analogue today to Mad Dog Beck, who ate dog biscuits in front of a client to prove how hungry he was to do get deals done? How about short statured Ron Perlman buying Revlon so he could date models?
One scandal from that era was that of billionaire Sid Bass’ affair with the woman that became his second wife, the then Mercedes Kellogg. Bass’ first wife Ann was a fixture in New York society, perfectly groomed, a thin and very attractive blonde with impeccable manners, a former ballet dancer who patronized the American Ballet Theater, the archetype of a trophy wife. But she was also a bit cool and sometimes seen as overly fastidious. Mercedes set her sights on Sid even though she was married as well (to Ambassador Francis Kellogg). She was fun, lively, the sort who could captivate a dinner table with sparkling conversation, and get away with initiating a bun fight with Sid at a society party. But after Mercedes and Sid married, Mercedes became increasingly cool and distant. The wags began to wonder if what they had seen as Anne’s shortcomings were really the result of being in proximity with Sid.
We see a similar metamorphosis in progress with Eric Schneiderman. Established readers may recall that Tom Miller, an unknown when he became the lead negotiator in the mortgage settlement on behalf of his fellow state attorney generals, quickly distinguished himself with how often he lied and how badly he did it. He started inauspiciously with promising criminal prosecutions and almost immediately walked that back. He wasn’t terribly convincing in dealing with the revelation that his donations from the FIRE sector increased 88 times in the previous year compared to what they’d given him in the preceding decade. He kept running the administration canard that the group negotiating with the banks had done serious investigations. And from January 2011, he’d regularly maintain a deal was “weeks” away, and gave several drop dead dates that were missed. He also kept insisting that the release for the banks would be narrow, when as we know, that was never in the cards.
The point is that 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.
It’s also worth noting that Schneiderman seems to be limiting himself to safe media settings. For instance, Chris Hayes tossed him only softballs (the supposedly tough questions had been raised so many times before that Schneiderman had answers ready). Alexis Goldstein of Occupy the SEC was temperamentally the most likely to try to pin him, but this isn’t her beat, and fellow panel members can only get at most a pointed question or two in. You’ll notice how Schneiderman pleasantly runs out the clock:
However, if you watch closely, you’ll see that the pleasant patter is a thin veneer over some less than pretty developments. First, at the end, Hayes asks Schneiderman if he’d quit if the task force seemed to be going nowhere. The answer was a dodge. This is a walk back from the position the AG took earlier, that he’d quit if there was insufficient progress.
Second, Schneiderman says that two weeks ago, there were 50 people working with the task force and he’s getting “a couple of more people” in the next few weeks. As we’ve said, this looks completely consistent with existing (and not very aggressive) efforts being pulled under this new umbrella.
Third, Schneiderman justifies the slow to probable no ramp-up to the procedures that need to be put in place to recruit people. By contrast, Elizabeth Warren was appointed by Obama as special advisor to “stand up” an entire new agency, the CFPB, in September 2010 and was largely done by spring 2011. This entailed hiring hundreds of people, as well as (looking at her calendar) frequent meetings with bankers, consumer advocates, regulators, Congresscritters, and media. The difference? The Administration was committed to putting an agency in place (and I suspect they had no idea how effective Warren would be; my pet theory is they assumed she was an academic and would prove not to be up to the challenge. Whoops).
Fourth, Scheiderman keeps stressing it takes time to develop cases. Exactly what has he been doing as attorney general? Three states which appear to have started later than he did (as in they became disaffected with the AG negotiations later) and have smaller offices launched meaty cases in 2011. All Schneiderman has done is file a MERS case that he settled for a mere $25 million.
Fifth, he also mentioned the $55 million of supposed future funding that he has touted previously as proof that the effort was serious.This has since proven to be vaporware. Dave Dayen writes:
One of the items Eric Schneiderman has been using to push back on claims that the Residential Mortage Backed Securities (RMBS) working group is being slow-walked and made ineffectual is that they have a funding stream earmarked for it that testifies to the seriousness of effort with respect to resources. In an op-ed two weeks ago, Schneiderman wrote that “The President has requested a congressional appropriation of an additional $55 million to ensure that we have the resources to do a thorough job.”
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 café…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….
Why was this unrealistic budget request ever allowed to be offered as evidence of the seriousness of effort?..It’s just another example of how the protestations about the legitimacy of the working group fall apart when subjected to the slightest scrutiny.
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.