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Yes, Really, Truly, No Joke, That Schneiderman Mortgage Task Force is Gonna Get Someone….Soon!

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I’m sure the banksters are quaking in their boots. Eric Schneiderman, the New York state attorney general whose joining a heretofore moribund mortgage fraud task force and withdrawing from opposition to the horrid mortgage settlement allowed the Administration to push the bank-friendy deal across the line, is now making noises that really, truly, he and his Federal best buddies are gonna nail some baddies really soon. From Reuters:

The mortgage task force formed by President Barack Obama to probe misconduct that contributed to the financial crisis will soon take legal action, New York Attorney General Eric Schneiderman said on Thursday.

Schneiderman, a co-chair of the task force, would not say whether cases would be brought against individuals or financial institutions. He also would not comment on whether criminal charges would be filed.

But he said his office would take action and that he expected his federal counterparts on the task force to do so as well.

“We’ll see actions being taken sooner rather than later,” said Schneiderman, speaking in an interview at his office in New York.

The Residential Mortgage-Backed Securities Working Group was formed in January, to probe the pooling and sale of risky mortgages in the runup to the 2008 financial crisis. Obama said he was creating the group to “hold accountable those who broke the law” and “help turn the page on an era of recklessness.”

Schneiderman said he believes it is still necessary to go after the “bad actors” to restore confidence in the financial markets.

“It’s important to convey the sense that no one is above the law. There’s a set of rules to which all will be held accountable, including big players on Wall Street,” Schneiderman said.

It might help if Reuters did reporting rather than took dictation. As we pointed out in older posts, this “task force” is merely a new unit in an interagency Financial Fraud Enforcement Task Force established in 2009 which looks to have done precisely nothing since its inception. And the New York Times, which had been solidly in Scheiderman’s camp when he looked to be taking on the big banks, issued a “show me” op ed and specified what Schneiderman and the Feds needed to do to be credible:

To win and retain public trust…The administration must ensure that the group has ample resources. The co-chairmen must hire a tough-as-nails prosecutor with a successful track record in financial fraud to drive the investigation forward. And the group must move quickly and vigorously, issuing subpoenas and filing cases. It is not starting from scratch; various agencies have all had separate investigations under way.

Neither of these things have happened. Schneiderman and his new allies have thrown out staff numbers that were way too low to be taken seriously even if these were new resources. And it was very clear they weren’t that the task force was simply taking all the people already working on various mortgage related investigations (which were clearly going nowhere, given how many years have elapsed since the toxic phase of mortgage origination) and redesignating them as mortgage task force members (yes, there were eventually some new hires, but again, too few to change this basic picture, and no high-profile, kick-ass prosecutor leading the charge).

And that’s before you get to the way the Administration went out of its way to humiliate Schneiderman. As we wrote in April:

It was pretty obvious Schneiderman had been had. Obama tellingly did not mention his name in the SOTU. Schneiderman was only a co-chairman of the effort and would still stay on in his day job as state AG, begging the question of how much time he would be able to spend on the task force. His co-chairman is Lanny Breuer from the missing-in-action Department of Justice. And most important, no one on the committee was head of an agency, again demonstrating that this wasn’t a top Administration priority.

The Administration started undercutting Schneiderman almost immediately. He announced that the task force would have “hundreds” of investigators. Breuer said it would have only 55, a simply pathetic number (the far less costly savings & loan crisis had over 1000 FBI agents assigned to it). And they taunted him publicly by exposing that he hadn’t gotten a tougher release as he has claimed to justify his sabotage….

This update comes from the New York Daily News (hat tip Matt Stoller):

On March 9 — 45 days after the speech and 30 days after the announcement — we met with Schneiderman in New York City and asked him for an update…As of that date, he had no office, no phones, no staff and no executive director. None of the 55 staff members promised by Holder had materialized. On April 2, we bumped into Schneiderman on a train leaving Washington for New York and learned that the situation was the same.

Tuesday, calls to the Justice Department’s switchboard requesting to be connected with the working group produced the answer, “I really don’t know where to send you.” After being transferred to the attorney general’s office and asking for a phone number for the working group, the answer was, “I’m not aware of one.”…

In fact, the new Residential Mortgage-Backed Securities Working Group was the sixth such entity formed since the start of the financial crisis in 2009. The grand total of staff working for all of the previous five groups was one, according to a surprised Schneiderman. In Washington, where staffs grow like cherry blossoms, this is a remarkable occurrence.

We are led to conclude that Donovan was right. The settlement and working group — taken together — were a coup: a public relations coup for the White House and the banks…

But for 12 million American homeowners, collectively $700 billion under water, this was just another in a long series of sham transactions.

Back to the current post. Remember, for this, Schneiderman betrayed the public and made it possible for the banks to get a settlement that had state and federal prosecutors sign away their ability to use the best legal theories for pursuing mortgage abuses, that of chain of title issues.

And his little sales pitch to Reuters is revealing. There are no typical prosecutor statements about bringing criminals to justice, rooting out bad conduct, busting up fraudulent operations. He’s not trying to pretend that the Task Force plans to get to the bottom of anything. Schneiderman knows that reporters and commentators on this beat know full well that the task force is an exercise in “all hat, no cattle” and he’s only willing to go so far in PR messaging. Look at what he said: the task force is not seeking to render justice. It’s out to restore confidence!
That means, above all, don’t rattle the banks. As Marcy Wheeler pointed out, not upsetting the financial services industry is now an excuse for not prosecuting big corporate miscreants. She introduces an excerpt from a speech by the DoJ’s Lanny Breuer, one of Schneiderman’s co-chairs on the task force:

But the real tell is when he confesses that he “sometimes–though … not always” let corporations off because a CEO or an economist scared him with threats of global markets failing if he held a corporation accountable by indicting it.

To be clear, the decision of whether to indict a corporation, defer prosecution, or decline altogether is not one that I, or anyone in the Criminal Division, take lightly. We are frequently on the receiving end of presentations from defense counsel, CEOs, and economists who argue that the collateral consequences of an indictment would be devastating for their client. In my conference room, over the years, I have heard sober predictions that a company or bank might fail if we indict, that innocent employees could lose their jobs, that entire industries may be affected, and even that global markets will feel the effects. Sometimes – though, let me stress, not always – these presentations are compelling. [my emphasis]

None of this is surprising, of course. It has long been clear that Breuer’s Criminal Division often bows to the scare tactics of Breuer’s once and future client base.

So let’s go back to the Schneiderman statement:

It’s important to convey the sense that no one is above the law. There’s a set of rules to which all will be held accountable, including big players on Wall Street.

Notice the revealing word choice: “important to convey the sense”. Not “important to enforce the law.” This is (at most) about maintaining the appearance of being even handed about enforcement.

Schneiderman appears to be on track to living up to our low expectation of engaging in a Potemkin version of an investigation, bringing a few cases close to the election to generate deceptive and useful “tough on crime” headlines. As we wrote in April:

Schneiderman entered into an obvious Faustian pact. He’s not getting his soul or his reputation back.

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34 comments

  1. Lambert Strether

    Well, it could be that they’ve had one or two fall guys trussed up for awhile, which would be why Schneiderman [genuflects] didn’t need a phone, an office, or staffers beyond a few spokesholes. Could be an October surprise!

    * * *

    That said, one or two (no doubt civil) indictments are no subtitute for cauterizing an entire criminal class. We need to see a cage full of banksters, as in the Italian mafia trials. Na ga happen, no matter what.

    1. Capo Regime

      Indeed. Amazingly most americans think justice system in the U.S. is far more effective and clean than that of the Italians. In the U.S. we get Deputy Dawg and apoligists in the media.

    2. LadyLiberty

      Let’s go to the scorecard obama strikes out

      CONVICTED: Bush 1300+, Clinton 1000+, Obama 0.0 (+/-)

      http://dailybail.com/home/convicted-bush-1300-clinton-1000-obama-00.html

      Foreclosure Fail: Study Pins Blame on Big Banks

      http://www.propublica.org/article/foreclosure-fail-study-pins-blame-on-big-banks

      Sure they knew qEfinity was coming why should they fix any of them? Fed buying all those MBS’s, cronies like bailed out buffet and scumbag soros will make huge $$

      A Huge Housing Bargain — but Not for You

      http://www.thestreet.com/story/11224917/a-huge-housing-bargain–but-not-for-you.html

      Investors With Ties To Buffett, Soros, Obama Plan Mortgage Eminent Domain Grab

      http://www.futureofcapitalism.com/2012/06/investors-with-ties-to-buffett-soros-obama-plan

      Warren Buffett: I’d Buy Up 200,000 Homes, Houses Better Investment Than Stocks At Today’s Rates

      http://seattlehome.com/blog/2012/03/1368/

      Buffett’s Betrayal
      By Rolfe Winkler

      http://blogs.reuters.com/rolfe-winkler/2009/08/04/buffetts-betrayal/

  2. Tim

    The fix is in– clearly senior leadership in the Democratic Party has no interest in real prosecutions of responsible parties. Sure, some (alleged) local low-lifes are going to get prosecuted for mortgage modification scams. But the big players? Nope. It’s pretty clear to me that at the local government level, there are people who get it. But they aren’t getting any cover from people higher up in the leadership.

    I’ve said it before and I’ll say it again; I’m not sure that the Democratic party elite realize what happens as more and more average Americans lose faith in the system’s ability to self-correct. I think it’s because at the elite level, people are just insulated inside a security bubble. That’s never a good thing. I’ve heard it said that in the early 1960s, an ordinary person could drop by the Justice Department without an appointment and make a complaint, and eventually talk with the Attorney General.

    They probably couldn’t get past the front door these days. That says a lot about where we are.

  3. albrt

    Perhaps Schneiderman will indict Zombie Osama bin Laden for mortgage fraud. I’m sure Obama would like that.

    Perhaps the President would even give Schneiderman back one of his testicles. Or at least let him visit it once in a while.

    1. Claire

      En attendant Schneiderman

      Boy: (in a rush). Mr. Schneiderman told me to tell you he won’t come this evening but surely tomorrow.

  4. psychohistorian

    Schneiderman said: “It’s important to convey the sense that no one is above the law. ”

    Hey Schneiderman! Its important to create the reality that no one is above the law. That is what the rest of us have to live with. Why are not the puppets of the global inherited rich in jail?

    1. Leviathan

      If you want to know how jaded the good people of this land are do some phone banking. Our moderate (yes they exist) Republican Rep is quite popular with the constituents. Romney however is in big trouble. Show contempt for the people and they will give it right back.

  5. YankeeFrank

    When did our entire professional class, as a whole, lose its balls? Journos live to suck up to their subjects, prosecutors take the dive and in the process make themselves look like the biggest wimps in history. I tell you — a lot of this is because the powerful have banded together and no longer compete against each other. It used to be a powerful entity or person would hire a tough former prosecutor who had gone after others of its kind and been successful, knowing that they would be getting the best defense around. Now they all agree not to hire anyone who’s been tough on them. Same with journos — they get no access if they’ve been honest and tough on their subjects — a big wall has been erected against truth-telling by the powerful. I guess its smart on the part of the powerful do act this way (in the short term anyway), but where they think this will end when the people no longer have faith in the institutions THEY rely on way more than we do I do not know.

    Now before I get jumped on for being naive I’m not saying nothing like this went on in the past. Of course it did, but it wasn’t this monolithic, and it wasn’t so obvious — there was a clear sense that justice did get done against powerful actors — not always, but often enough that we still had faith that the most egregious behaviors would get punished. Now that’s no longer true, and we are quickly losing faith in all of our institutions. Good luck powerful assholes! Maintaining your power under such circumstances is going to get harder and harder. They have forgotten who ultimately runs things, and as the people remember it is they who are the foundation for all of civil society its going to get very bad for these miscreants, quick.

  6. change agent

    I much prefer our state’s AG, Pam Bondi. I would place she and Mr. Schneiderman as equally effective in their efforts in fooling the public that the “citizen’s best interest” is their focus. With Bondi, we knew that from Day 1 of her term. Eric, you were such a tease, now please shut up and go away.

  7. NuYawkFrankie

    Well, at least we can all rest assured that with a name like “Schneiderman” the NY DA has absolutely no affinity – genetic, religious or cultural – to the majoriry of Wall St perps…. and we can therefore expect swift and draconian penalties to be meted out.

    1. YankeeFrank

      Yep. All of us Jews stick together. That’s why they had to roust us out in Germany.

      Come on NuYawkFrankie, tell us about your struggle.

  8. Norman

    Reading this slice, reminded me of the few lyrics to a song from another era, the “guns & butter” era, “Gonna Get Fooled Again”.

  9. Zuzu's Stem

    “We’ll see actions being taken sooner rather than later,” said Schneiderman…

    Let me guess: In three or four years?

    If he can hold off any action long enough, before you know it we’ll be into the second Obama term and that plumb job in the Justice Dept he’s been dreaming of will be his.

    1. JohnR

      He has to say that! Otherwise someone’s gonna get wise to the time running out on all the statutes of limitations. You know, stall, stall, promise, stall, OOOoppps! Times out!

  10. Conscience of a Conservative

    The story in the Huffington Post had a comment that any actions were likely to be civil and not criminal, so what we seem to be talking about are SEC style slap on the wrists. This is a huge disappointment.. I mean Schneiderman, Holder & Breuer “met expectations”…

  11. Susan the other

    Everything related to securitization fraud has been handled in concert. Now that the Fed has pledged to buy up all the MBS the banks can find in their attic, Schneiderman can come forward and say he wants to convey a sense of justice about this unfortunate episode. In 2 years all fraud-relevant paperwork in question will be redigitized and cached away In a vault at the Fed (or shreded). Title problem? What title problem?

  12. Stupendous Man - Defender of Liberty, Foe of Tyranny

    Window lickers and f*cktards. What else can legitimately be said?

  13. Guy Fawkes Lives

    Until every last banker and the governmental agencies that were in collusion, I will never believe my government ever ever again.

  14. Guy Fawkes Lives

    “Unless we fix the housing crisis and the resulting inequality of wealth and income in this country, we are flirting with social chaos.” -Neil Garfield

  15. Senka

    I’d send a FOIA request to this “working group” – two pages of questions – got a response from them that they will forward the requested info by 10/12
    in the meantime our country continues to be a crime scene – every day thousands of families are becoming homeless due to a fraudulent foreclosures.
    here is a segment from CBS Atlanta with a great analysis of all this fraud – http://www.youtube.com/watch?v=svS63XBfK8Y

  16. Sagebrush

    The mortgage task force formed by President Barack Obama to probe misconduct that contributed to the financial crisis is never going to take legal action against any of the crooks who caused the crisis. New York Attorney General Eric Schneiderman is a smoke screen and Obama is lying when he says the people who broke the law will be held accountable. Those people own Obama, his administration, and most of the sitting Congress. Hell, they probably own Schneiderman too. The closer to the statute of limitations we get the more sheeple calming crap we’re going to hear till suddenly it’ll be, We just couldn’t prove crimes were committed without more time and now it’s too late. They bought Romney too, so don’t expect anything to change if he wins in November.

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