Normally I’d relegate a good job of news spadework to the daily Links feature, but Bloomberg caught out Attorney General Eric Holder in such an egregious lie that this failed con job merits ample, widespread publicity and well-deserved derision.
So remember that Mortgage Fraud Task Force? No? There’s a really good reason the name doesn’t ring a bell. It’s been missing in action. As we wrote last September:
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
That post was in September. In October, Eric Holder announced publicly, au contraire, this task force had really been busting chops! And he cited figures of activity since October 2011 to prove it. As Jonathan Weil of Bloomberg recapped:
When Holder first trotted out these figures last October, he bragged during a press conference about the
results of the government’s “Distressed Homeowner Initiative,” which he called “a groundbreaking, yearlong mortgage-fraud enforcement effort” and “the first ever to focus exclusively on crimes targeting homeowners.” Secretary of Housing and Urban Development Shaun Donovan joined him at the press conference.
To be honest, I ignored this announcement. My assumption was that they had somehow found creative ways to attribute some of the actions of the people involved in the pretty much moribund task force to the task force itself (the Administration has done this sort of thing creative accounting elsewhere). To be honest, I didn’t regard the October announcement as credible, since this group had not launched a case against either a meaningfully large player or at conduct that was central to the crisis.
But what actually occurred was even worse than my reflexively cynical take.
Bloomberg could also tell that this story didn’t even remotely add up. Weil again:
Last October, two days after Holder first publicized the numbers, Phil Mattingly and Tom Schoenberg of Bloomberg News broke the story that some of the cases included in the Justice Department’s tally occurred before the initiative began in October 2011. At least one was filed more than two years before President Barack Obama took office….
My column about the Justice Department’s refusal to come clean ran a few days later last fall. And it seems obvious now why I wasn’t given the list. The government would have been handing me the proof that the numbers it was touting were wrong.
Weil recounts how he kept after the DoJ flack and got all sorts of promises and excuses. Finally, presumably hoping no one cares about mortgage abuses any more now that housing prices are up, the Administration came clean in the most backhanded way possible…..by issuing a corrected press release.
And how big were the corrections? You be the judge:
Originally the Justice Department said 530 people were charged criminally as part of a year-long initiative by the multi-agency Mortgage Fraud Working Group. It now says the actual figure was 107 — or 80 percent less. Holder originally said the defendants had victimized more than 73,000 American homeowners. That number was revised to 17,185, while estimates of homeowner losses associated with the frauds dropped to $95 million from $1 billion.
So get this: the number of people charged criminally was originally exaggerated more than five times. The amount of people victimized was overstated by over four times, and the dollar losses, more than ten times. And the original dollar losses were bupkis relative to the harm mortgage borrowers suffered, and the revised number, $95 million, is a pathetic joke. The Administration had the nerve to show its face and try to spin this insult as some sort of positive outcome? They’d have been better off firing everyone associated with it and handing out the money saved to Legal Aid offices all over the US. Or just give the money to homeless people in DC.
And let’s do some simple math. The average amount of damage done by each fraudster they nailed was $880,000. And the harm per homeowner averaged $5,500. Heck of a job, Brownie!