Obama Administration Pressures Prosecutors To Drop Criminal Investigations Of Banks Over Mortgage Fraud

The last few years have been replete with stories of fraudulent and possibly criminal acts for banks in the mortgage crisis. Thousands have lost their homes and faced financial ruin. The Administration is yielding to demands from lobbyists for the banks and particularly targeting Eric T. Schneiderman, the attorney general of New York, in demanding support for a deal that would offer just civil fines rather than criminal penalties.

Various organizations have denounced the actions of the Obama Administration as caving into this powerful lobby — as it has caved into the oil/gas lobby on offshore drilling, pharmaceutical lobby on health care legislation, and telecom lobby on immunity from privacy lawsuits.

Schneiderman and other state prosecutors want to hold bank officials liable for the harm that they have caused. They believe there are strong cases for criminal prosecution. Shaun Donovan, the secretary of Housing and Urban Development, and various other Administration officials have been pressuring the states to give the industry a pass on any crimes. Bank officials are known to have contacted Donovan and other Administration officials to pressure prosecutors. The industry (and the Obama Administration) wants to force attorneys general to grant waivers from criminal liability in exchange for civil fines.

Among other possible cases, Schneiderman objects to giving a pass to New York Mellon and Bank of America that would cover 530 mortgage-backed securities containing allegedly fraudulent Countrywide Financial loans.

Source: NYT

83 thoughts on “Obama Administration Pressures Prosecutors To Drop Criminal Investigations Of Banks Over Mortgage Fraud

  1. Those lobbyists! Again!

    Realistically, our prisons mightn’t be large enough to accommodate all the criminals in the financial and mortgage frauds, plus the upkeep of prisoners is mainly a taxpayer expense. Whatever happened to work gangs?

    Therefore I suggest the following :
    1. Civil penalities up to treble the damage of each lost home, or $2m, whichever is greater.
    2. At least 2,000 hours community service – preferably serving the homeless and cleaning up streets, parks and graffiti.
    3. Losing their licenses and being banned from working in the financial industry ever again. Perhaps they can take some of their ill gotten gains and start manufacturing businesses in mid-America and work to re-build economy and the middle class.

    There are creative solutions to this problem. The lobbyists invalidating the rights of the people and helping criminals escape accountability are the bigger problem.

    President Obama needs to stand up for the people and show he can stand strong against the lobbyists. The HUD Secretary needs to be replaced, either by tendering his resignation (no golden parachute, please) OR being fired (no unemployment, please).

    Arizona’s Sheriff Arpaio might be a good HUD Secretary – he’d know what to do with those pesky lobbyists.

  2. Obama got a lot of $ from the financial sector in the 2008 campaign. Recently, the Romney campaign has been trumpeting how much the sector is giving to him. I wonder.. If Wall Street abandons Obama in this election round, would that change the political calculus enough for something to happen?

    The Obama administration has clearly made the political calculation that prosecuting people for the financial crimes that contributed to the global economic crisis would be bad for the administration and the Democratic party in the short to mid term. They’re right, of course – the Republicans would claim that such prosecutions would “kill jobs”, “frighten the job creating class” and such. (Subtext, “Them Wall Street types is yer easy money lottery ticket! They dun make money out of thin air, an som’ uv it done gunna trickle down to you! Plus, Jesus loves rich folks more, so it’s God’s will! And Obama, that godless Muslim CommiFascist ni… ni…. uh, Kenyan dun messed up the magic money makin’!”)

    None of this is to say that there aren’t plenty of Democrats who are on Wall Street’s payroll…

    But… If the financial sector really is withdrawing its support for Obama, and moving it to Romney, and Obama looses in 2012, does Obama have the guts to stick it to them on his way out? Certainly, he’s got a lot of company among fellow weak-kneed Democrats who, despite this hypothetical political defeat, would be terrified to shiv the bastards. But it might be tough for an outgoing administration to put much pressure on state prosecutors with stacks of evidence…

  3. As we all know, lawyers were among the people who caused the problems.

    In 2002, I included the ABA as a defendant when I sued a bunch of lawyers and I argued basically that they over protected lawyers in various ways including pretending that lawyers were immune from civil lawsuit. That was not well received. The lawyers and magistrate were like “ha ha ha — lawyers have immunity when employed as an advocate”. So if I had made some progress 8 or 9 years ago maybe the mortgage fraud problem would have been smaller in magnitude.

  4. MerryMarjie-

    You beat me to the punch. I was going to ask if anyone remembered anything that has happened since January 20, 2009 where President Obama was on OUR side. This is why he is in serious need of a Primary challenge from the left to wake him up and remind him who elected him the first time. As a Progressive, I’m tired of being sneered at by a phony “Liberal” and a phony “Constitutional scholar”. I have known now for a long time who he really is, and that he will never get my vote again.

  5. Apparently they don’t tech Ethics as I did elsewhere, at Harvard Law..!

    What the fuck do they teach up there at Harvard Law anyway..?

    I guess Lawrence Tribe taught how to suck up to corrupt bankers and screw the working class as a tutorial to Obama..!

  6. The bums should be doing the perp walk right now. Somebody in the Democratic Party has to take President Obama aside and set him straight. This is outrageous.

  7. Swarthmore mom,

    I’m a big believer in Heinlein’s aphorism about the choice between bad and worse being much more important than the choice between good and better and this one’s shaping up to be a doozy!

    p.s. Civil penalties would be fine – as long as they included restoring every family that was foreclosed on to their home (or a home of similar value) and giving them the mortgage free and clear. Anything less is an insult to the pain and suffering they caused.

  8. Jonathan,

    Here are more stories on this subject that I left previously on my S.E.C. post:

    From Glenn Greenwald at Salon. His post has links to other interesting articles:

    Obama administration takes tough stance on banks

    In mid-May, I wrote about the commendable — one might say heroic — efforts of New York Attorney General Eric Schneiderman to single-handedly impose meaningful accountability on Wall Street banks for their role in the 2008 financial crisis and the mortgage fraud/foreclosure schemes. Not only was Schneiderman launching probing investigations at a time when the Obama DOJ was steadfastly failing to do so, but — more importantly — he was refusing to sign onto a global settlement agreement being pushed by the DOJ that would have insulated the mortgage banks (including Bank of America, Citigroup, JPMorgan Chase and Wells Fargo) from all criminal investigations in exchange for some relatively modest civil fines. In response, many commenters wondered whether Schneiderman, if he persisted, would be targeted by the banks with some type of campaign of destruction of the kind that brought down Eliot Spitzer, but fortunately for the banks, they can dispatch their owned servants in Washington to apply the pressure for them…


    Corrupt Obama Administration Pressuring New York Attorney General to Support Mortgage Whitewash
    by Yves Smith
    Naked Capitalism

    It is high time to describe the Obama Administration by its proper name: corrupt.

    Admittedly, corruption among our elites generally and in Washington in particular has become so widespread and blatant as to fall into the “dog bites man” category. But the nauseating gap between the Administration’s propaganda and the many and varied ways it sells out average Americans on behalf of its favored backers, in this case the too big to fail banks, has become so noisome that it has become impossible to ignore the fetid smell.

    The Administration has now taken to pressuring parties that are not part of the machinery reporting to the President to fall in and do his bidding. We’ve gotten so used to the US attorney general being conveniently missing in action that we have forgotten that regulators and the AG are supposed to be independent. As one correspondent noted by e-mail, “When officials allegiances are to El Supremo rather than the Constitution, you walk the path to fascism.”

    Revealingly, one of the Administration’s allies said: “Wall Street is our Main Street.” And the worst is that this remark may not be a cynical Ministry of Truth pronouncement. Team Obama bears all the hallmarks of being so close to banks and big corporations that it has lost all contact with and understanding of mainstream America.

    The latest example is its heavy-handed campaign to convert New York state attorney general Eric Schneiderman to a card carrying member of the “be nice to our lords and masters the banksters” club. Schneiderman was the first to take issue with the sham of the so-called 50 state attorney general mortgage settlement. As far as the Administration is concerned, its goal is to give banks a talking point and prove to them that Team Obama is protecting their backs in a way that the chump public hopefully won’t notice.

    The Administration joined this effort to hurry it forward and assure it resulted in a suitably financier-friendly outcome. And it has done so despite recent HUD inspector general’s audits finding that the five biggest servicers were defrauding taxpayers. We’ve heard not a peep of follow up on that front; instead, the Administration keeps leaking its tired “A settlement is just around the corner” story.

    Schneiderman is far from the only person to see what a sellout this “settlement” is. The basic premise of a settlement is to obtain some sort of restitution to induce a prosecutor/plaintiff to drop a current or likely lawsuit. For the aggrieved party to get a good settlement, it needs to have a credible case, as in facts (a smoking gun or two) and a legal theory as to why those facts mean the perp is in hot water.

  9. Eric Schneiderman sent the following E Mail to his supporters today:

    “Dear Friend,

    You might have been following the latest developments related to the national settlement of the mortgage probe, including this story in today’s Huffington Post about our tough fight for a comprehensive resolution to this crisis.

    Let me tell you directly: I am deeply committed to pursuing a full investigation into the misconduct that led to the collapse of America’s housing market, and to seeking a resolution that gives homeowners meaningful relief, allows the housing market to begin to recover, and gets our economy moving again.

    Our ongoing investigation into the housing crisis cannot be shut down to accommodate efforts to settle quickly and give banks and others broad immunity from further legal action. If you have any thoughts or concerns about this critical issue, please contact me at 1-800-771-7755, or send a message via Facebook or Twitter.

    Thank you for your support,

    Eric T. Schneiderman
    Attorney General”

    He is standing firm despite the pressure being put on him by the administration. As I’ve stated elsewhere here I’ve met Eric and followed his career closely, I believe that he will continue to stand firm.

  10. From Matt Taibbi–earlier this year:

    Why Isn’t Wall Street in Jail?
    Financial crooks brought down the world’s economy — but the feds are doing more to protect them than to prosecute them
    Rolling Stone (March 3, 2011 Issue)

    Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer.

    “Everything’s fucked up, and nobody goes to jail,” he said. “That’s your whole story right there. Hell, you don’t even have to write the rest of it. Just write that.”

    I put down my notebook. “Just that?”

    “That’s right,” he said, signaling to the waitress for the check. “Everything’s fucked up, and nobody goes to jail. You can end the piece right there.”

    Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world’s wealth — and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people.

    The rest of them, all of them, got off. Not a single executive who ran the companies that cooked up and cashed in on the phony financial boom — an industrywide scam that involved the mass sale of mismarked, fraudulent mortgage-backed securities — has ever been convicted. Their names by now are familiar to even the most casual Middle American news consumer: companies like AIG, Goldman Sachs, Lehman Brothers, JP Morgan Chase, Bank of America and Morgan Stanley. Most of these firms were directly involved in elaborate fraud and theft. Lehman Brothers hid billions in loans from its investors. Bank of America lied about billions in bonuses. Goldman Sachs failed to tell clients how it put together the born-to-lose toxic mortgage deals it was selling. What’s more, many of these companies had corporate chieftains whose actions cost investors billions — from AIG derivatives chief Joe Cassano, who assured investors they would not lose even “one dollar” just months before his unit imploded, to the $263 million in compensation that former Lehman chief Dick “The Gorilla” Fuld conveniently failed to disclose. Yet not one of them has faced time behind bars.

    Instead, federal regulators and prosecutors have let the banks and finance companies that tried to burn the world economy to the ground get off with carefully orchestrated settlements — whitewash jobs that involve the firms paying pathetically small fines without even being required to admit wrongdoing. To add insult to injury, the people who actually committed the crimes almost never pay the fines themselves; banks caught defrauding their shareholders often use shareholder money to foot the tab of justice. “If the allegations in these settlements are true,” says Jed Rakoff, a federal judge in the Southern District of New York, “it’s management buying its way off cheap, from the pockets of their victims.”

    To understand the significance of this, one has to think carefully about the efficacy of fines as a punishment for a defendant pool that includes the richest people on earth — people who simply get their companies to pay their fines for them. Conversely, one has to consider the powerful deterrent to further wrongdoing that the state is missing by not introducing this particular class of people to the experience of incarceration. “You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street,” says a former congressional aide. “That’s all it would take. Just once.”

    But that hasn’t happened. Because the entire system set up to monitor and regulate Wall Street is fucked up.

    Just ask the people who tried to do the right thing.

  11. Also from Taibbi–last fall:

    Invasion of the Home Snatchers
    Matt Taibbi on how foreclosure courts are helping big banks screw over homeowners
    Rolling Stone (November 25, 2010 Issue)

    The foreclosure lawyers down in Jacksonville had warned me, but I was skeptical. They told me the state of Florida had created a special super-high-speed housing court with a specific mandate to rubber-stamp the legally dicey foreclosures by corporate mortgage pushers like Deutsche Bank and JP Morgan Chase. This “rocket docket,” as it is called in town, is presided over by retired judges who seem to have no clue about the insanely complex financial instruments they are ruling on — securitized mortgages and laby­rinthine derivative deals of a type that didn’t even exist when most of them were active members of the bench. Their stated mission isn’t to decide right and wrong, but to clear cases and blast human beings out of their homes with ultimate velocity. They certainly have no incentive to penetrate the profound criminal mysteries of the great American mortgage bubble of the 2000s, perhaps the most complex Ponzi scheme in human history — an epic mountain range of corporate fraud in which Wall Street megabanks conspired first to collect huge numbers of subprime mortgages, then to unload them on unsuspecting third parties like pensions, trade unions and insurance companies (and, ultimately, you and me, as taxpayers) in the guise of AAA-rated investments. Selling lead as gold, shit as Chanel No. 5, was the essence of the booming international fraud scheme that created most all of these now-failing home mortgages.

    The rocket docket wasn’t created to investigate any of that. It exists to launder the crime and bury the evidence by speeding thousands of fraudulent and predatory loans to the ends of their life cycles, so that the houses attached to them can be sold again with clean paperwork. The judges, in fact, openly admit that their primary mission is not justice but speed. One Jacksonville judge, the Honorable A.C. Soud, even told a local newspaper that his goal is to resolve 25 cases per hour. Given the way the system is rigged, that means His Honor could well be throwing one ass on the street every 2.4 minutes.

    Foreclosure lawyers told me one other thing about the rocket docket. The hearings, they said, aren’t exactly public. “The judges might give you a hard time about watching,” one lawyer warned. “They’re not exactly anxious for people to know about this stuff.” Inwardly, I laughed at this — it sounded like typical activist paranoia. The notion that a judge would try to prevent any citizen, much less a member of the media, from watching an open civil hearing sounded ridiculous. Fucked-up as everyone knows the state of Florida is, it couldn’t be that bad. It isn’t Indonesia. Right?

    Well, not quite. When I went to sit in on Judge Soud’s courtroom in downtown Jacksonville, I was treated to an intimate, and at times breathtaking, education in the horror of the foreclosure crisis, which is rapidly emerging as the even scarier sequel to the financial meltdown of 2008: Invasion of the Home Snatchers II. In Las Vegas, one in 25 homes is now in foreclosure. In Fort Myers, Florida, one in 35. In September, lenders nationwide took over a rec­ord 102,134 properties; that same month, more than a third of all home sales were distressed properties. All told, some 820,000 Americans have already lost their homes this year, and another 1 million currently face foreclosure.

    Throughout the mounting catastrophe, however, many Americans have been slow to comprehend the true nature of the mortgage disaster. They seemed to have grasped just two things about the crisis: One, a lot of people are getting their houses foreclosed on. Two, some of the banks doing the foreclosing seem to have misplaced their paperwork.

    For most people, the former bit about homeowners not paying their damn bills is the important part, while the latter, about the sudden and strange inability of the world’s biggest and wealthiest banks to keep proper records, is incidental. Just a little office sloppiness, and who cares? Those deadbeat homeowners still owe the money, right? “They had it coming to them,” is how a bartender at the Jacksonville airport put it to me.

    But in reality, it’s the unpaid bills that are incidental and the lost paperwork that matters. It turns out that underneath that little iceberg tip of exposed evidence lies a fraud so gigantic that it literally cannot be contemplated by our leaders, for fear of admitting that our entire financial system is corrupted to its core — with our great banks and even our government coffers backed not by real wealth but by vast landfills of deceptively generated and essentially worthless mortgage-backed assets.

    You’ve heard of Too Big to Fail — the foreclosure crisis is Too Big for Fraud. Think of the Bernie Madoff scam, only replicated tens of thousands of times over, infecting every corner of the financial universe. The underlying crime is so pervasive, we simply can’t admit to it — and so we are working feverishly to rubber-stamp the problem away, in sordid little backrooms in cities like Jacksonville, behind doors that shouldn’t be, but often are, closed.

  12. I have a question re “perp walk”. Do you think brothel customers have a right to privacy when soliciting a prostitute is a crime and they probably also knew there was income tax evasion involved?

  13. Obama Goes All Out For Dirty Banker Deal
    by Matt Taibbi
    August 24, 2011

    A power play is underway in the foreclosure arena, according to the New York Times.

    On the one side is Eric Schneiderman, the New York Attorney General, who is conducting his own investigation into the era of securitizations – the practice of chopping up assets like mortgages and converting them into saleable securities – that led up to the financial crisis of 2007-2008.

    On the other side is the Obama administration, all the banks, and, now, apparently, all the other state attorneys general.

    This second camp has all gotten together, put their heads together, and cooked up a deal that would allow the banks to walk away with just a seriously discounted fine from a generation of fraud that led to millions of people losing their homes.

    The idea behind this federally-guided “settlement” is to concentrate and centralize all the legal exposure accrued by this generation of grotesque banker corruption in one place, put one single price tag on it that everyone can live with, and then stuff the details into a titanium canister before shooting it into deep space.

    This deal is all about protecting the banks from future enforcement actions on both the civil and criminal sides. The plan is to provide year-after-year, repeat-offending banks like Bank of America with some stability and certainty, so that they know exactly how much they’ll have to pay in fines (trust me, it will end up being a tiny fraction of what they made off the fraudulent practices) and will also get to know for sure that there are no more criminal investigations in the pipeline.

    This deal will also submarine efforts by both defrauded investors in MBS and unfairly foreclosed-upon homeowners and borrowers to obtain any kind of relief in the civil court system. The AGs initially talked about $20 billion as a settlement number, money that would “toward loan modifications and possibly counseling for homeowners,” as Gretchen Morgenson reported the other day.

    The banks, however, apparently “balked” at paying that sum, and no doubt it will end up being a lesser amount when the deal is finally done.

    To give you an indication of how absurdly small a number even $20 billion is relative to the sums of money the banks made unloading worthless crap subprime assets on foreigners, pension funds and other unsuspecting suckers around the world, consider this: in 2008 alone, the state pension fund of Florida, all by itself, lost more than three times that amount ($62 billion) thanks in significant part to investments in these deadly MBS.

    So this deal being cooked up is the ultimate Papal indulgence. By the time that $20 billion (if it even ends up being that high) gets divvied up between all the major players, the broadest and most destructive fraud scheme in American history, one that makes the S&L crisis look like a cheap liquor store holdup , will be safely reduced to a single painful but eminently survivable one-time line item for all the major perpetrators.

    But New York’s Schneiderman, who earlier this year launched an investigation into the securitization practices of Goldman, Morgan Stanley, Bank of America and other companies, is screwing up this whole arrangement. Until he lies down, the banks don’t have a deal. They need the certainty of having all 50 states and the federal government on board, or else it’s not worth paying anybody off. To quote the immortal Tony Montana, “How do I know you’re the last cop I’m gonna have to grease?” They need all the dirty cops on board, or else the whole enterprise is FUBAR.

  14. Let me share my experience on the ground. I have represented clients on both sides of the foreclosure process for many years. From a lender’s standpoint, a mortgage foreclosure is uncomplicated and straightforward if the documents are in order. Virtually all bona fide foreclosures result in summary judgments.

    Over the last several years, I have represented a number of homeowners in these cases. I have invariably found the lender’s files to be a complete mess. In addition, the foreclosure mills pursuing many of these cases are only marginally competent. I have been able to defend summary judgment motions without difficulty not because of any particular brilliance, but because many lender’s lawyers haven’t a clue how to prepare a competent, admissible affidavit. They get away with it because most homeowners either do not retain attorneys or are convinced that defending a suit would be pointless. A good lawyer can throw a wrench into any “fast track” process.

    I am also a firm believer in the notion of consumers as private attorneys general. Private civil actions are the most effective means for uncovering fraud and overreaching. They are also the most effective means for forcing shareholders to look beyond their dividend checks and take responsibility for the actions of directors and officers. That is why consumer contracts contain mandatory arbitration clauses. It is also why virtually every mortgage agreement contains a jury trial waiver.

    A quick and dirty settlement favors only the institutions. The fines are paltry and will not affect future behavior. Lenders are able to prevent disclosure of information that would be useful in civil actions, making private suits that more difficult and labor intensive. I suspect that the Obama administration wants to be able to announce some sort of settlement months ahead of the election, and use it to promote its “commitment” to consumer protection.

    The actions of the Administration in this instance are irresponsible and not at all in the public interest. I hope that Mr. Schneiderman stands his ground.

  15. I’m keeping the email about this post marked as ‘unread’ so I remember to call the white house tomorrow and let them know, once again – and for a new reason – how disappointed I am in him.

  16. Mike A.,
    The Scheer article was excellent. Are the judges handling these foreclosure cases actually looking at the files or are they just going along with the fraud?

  17. N.Y. bumped from 50-state foreclosure committee
    By Brady Dennis

    Iowa Attorney General Tom Miller, who is leading foreclosure settlement negotiations with the nation’s largest banks on behalf of all 50 states, abruptly removed New York Attorney General Eric Schneiderman from the coalition’s executive committee Tuesday, saying he had “actively worked to undermine” the group’s efforts in recent months.

    Miller did not speak with Schneiderman before he sent word about the decision. Rather, Iowa assistant Attorney General Patrick Madigan e-mailed counterparts around the country just before 1 p.m. announcing that New York had been booted from the key group of states overseeing the negotiations, “effective immediately.”

    Despite the move, New York could still support whatever deal emerges. At the same time, it makes the path more difficult for Miller and others if they are forced to move forward without one of the most influential states, not to mention one hit hard by the foreclosure crisis and home to many of the financial firms under scrutiny. The absence of New York also could diminish the size of any settlement.

    Miller’s decision underscores tensions that have boiled over as officials try to finalize the multibillion-dollar deal with the banks whose widespread mortgage servicing problems — from appalling customer service to hundreds of thousands of “robosigned” documents — sparked national outrage last fall.

    A central issue is how broad a release from future legal claims banks should receive in exchange for agreeing to overhaul their mortgage servicing practices and paying tens of billions of dollars in penalties.

    Schneiderman, who has undertaken investigations into the way banks bundled and sold pools of mortgages, known as securitization, has said any settlement should not release banks from liability for all their mortgage-related sins committed before the financial crisis. Attorneys general from several other states, including Delaware, Nevada and Massachusetts, have expressed similar concerns.

    Inherent in Schneiderman’s warnings was an implication that officials negotiating the current deal are willing to give away too much, a suggestion that those involved in the talks describe as inaccurate and infuriating. Several people familiar with the talks said those at the negotiating table have never considered granting banks immunity from claims related to the securitization process, nor have they sought to prevent Schneiderman and others from pursuing broader investigations into other issues, such as securitization, fair housing claims and criminal fraud.

    It’s a Flawed Settlement
    New York Times
    August 22, 2011

    The Obama administration has turned up the heat on Eric Schneiderman, New York’s attorney general, to go along with a proposed settlement with the nation’s largest banks over dubious foreclosure practices. Mr. Schneiderman should stand his ground in not supporting the deal. The administration says that a settlement would quickly deliver much needed relief to hard-pressed borrowers, but it’s doubtful it would provide redress on a par with the banks’ wrongdoing or borrowers’ needs.

    The deal has been in the works for nearly a year, after the state attorneys general announced an investigation into a robo-signing scandal in which banks were found to have filed false foreclosure papers in state courts. It was widely believed that the scandal would lead to a broad inquiry into how banks inflated the housing bubble, profiting as it expanded.

    As it turned out, the inquiry was narrow. Mr. Schneiderman, who became the attorney general of New York after the scandal broke, has rightly refused to go along with a settlement that is not based on a thorough investigation, and has ordered investigations of his own. He has been supported by a handful of other state prosecutors, who say that the proposed deal would restrict their own investigations and prosecutions.

    Shaun Donovan, the secretary of Housing and Urban Development, however, says that a settlement on the narrow issue of robo-signing would not preclude other investigations by individual attorneys general. But, clearly, once the robo-signing issue is off the table, investigators would lose leverage to pursue remedies for other possible illegalities in the packaging, marketing and transferring of mortgage securities.

  19. rafflaw,

    Little Julia Anna is doing well. Thanks for asking. She’s absolutely perfect! I’ve been spending a lot of time at my daughter’s house–helping with my first grandchild and preparing meals. I enjoy being around to lend a hand. I just wish my daughter and son-in-law lived closer.

  20. So is a Class Action possible for these clown….or is the Class out…and if the NY AG refuses to back down…he he still bound by the Class Decision?

  21. Why Is NYT’s Dealbook Blog Defending SEC Misdeeds?
    by Matt Taibbi

    From the moment I first heard about the SEC’s 17-year history of document-shredding, I started wondering what defense the agency would eventually offer. For surely there had to be one; no great bureaucracy, public or private, just sits back and lazily accepts allegations of gross incompetence and/or corruption. There is always blowback, usually in the form of an outraged denial, and sometimes in the form of an attack upon the messenger, but always something.

    But in this particular case, in which one of the SEC’s own has come forward and told congress that the agency has been systematically destroying its own intelligence over the course of three presidencies, there hasn’t been any of this. My first clue came when I called the SEC before the story came out and asked them about the allegations by SEC attorney/whistleblower Darcy Flynn. I sent them a detailed questionnaire, both about the document disposal and the mini cover-up among SEC higher-ups like former Goldman executive Adam Storch (who was not sure he should “take on this exposure voluntarily,” because the SEC FOIA officer told him there “might be criminal liability”). Then, when I called back, I expected them to deny the whole thing and trash Flynn as an unreliable disgruntled employee.

    They did none of that. Instead, to my amazement, SEC spokesperson John Nester copped to the document destruction right away when I got him on the phone. When I asked him how long it had been going on, Nester not only offered that it had been “at least the early nineties,” but volunteered, without my even asking about it, that he couldn’t be sure it hadn’t “always been the policy.” He didn’t deny any of Flynn’s allegations at all. It was a very weird call – I kept waiting for the other shoe to drop, and it never did.

    Well, the SEC’s response finally did come down the pipeline yesterday, via the usual source – the New York Times’ banker-sponsored Dealbook blog, which is fast becoming the official mouthpiece of all guilty Wall Street. Although the Times in general has been home to some outstanding investigative journalism with regard to the financial services industry, the Dealbook blog occasionally feels like a thinly-disguised PR vehicle. This is one of those times, as Professor Peter Henning of Wayne University has now submitted what reads like a lengthy apologia on behalf of the SEC.

    The crux of Henning’s argument is as follows:

    The actual document destruction, which ended last year, probably had no significant effect on any continuing investigations because it only applied to inquiries dropped early. The greater effect is more likely to be on the S.E.C.’s reputation as a credible law enforcement agency, especially in cases involving corporate internal controls.

    So the argument is going to be that the SEC destroying 17 years’ worth of case documents is not consequential. The only thing that is consequential, in Henning’s mind, is the damage to the SEC caused by the revelation of this policy.

    Further down in Henning’s piece, he adds the following:

    What is clear, however, is a policy that may have violated federal law raises the specter that the S.E.C. was more concerned with making its life easier by getting rid of documents rather than complying with burdensome regulations. That is an often-repeated complaint about the S.E.C.’s own rules, a claim that might now gain greater resonance.

    Amazingly, Henning is using the SEC story as a means to argue that SEC regulations and reporting requirements are generally both burdensome and meaningless. It’s actually sort of a brilliant argument, when you think about it: if it’s too much of a bother for the SEC to follow its own rules, that means the rules must generally be stupid and, therefore, nobody should have to follow them.

  22. “….I will be seeing my grandsons tomorrow.”


    I wish I could see my grandson tomorrow….any tomorrow.

  23. OS,

    That is a kind statement…which is true for so many of us….in so many different ways….

    I had to learn that this is part of the life and we are all given lessons to learn…some we succeed at, some we fail…for about 3 years, I did fail miserably…today, I realize that it is only one of the options…

  24. The joke / blame is on US!

    Bros. Obama & Holden et al. would not have dreamed of such blatant measures if they were convinced that an outrage will sweep the whole Nation as a result of their efforts to expunge mega-perpetrators.

    We, the “People” proved time and again that we’re ready to swallow anything shoved down our throat.

    Some 2000 years ago, the Talmud stated that “it is not the mouse which stole the cheese, it is the hole in the wall (through which the mouse entered the house) that stole it!”

    Remember our previous, illustrious president who failed to recite the all American truism “Fool me once – shame on you, fool me …. etc.” This currency ain’t good no more!!!

    Welcome to the Brave New World, pals.

  25. Raff, no problem. Just had a melancholy moment there. I had been thinking about him and decided to write what I was feeling. It’s still very fresh, as AY implied. The tincture of time heals all wounds…..

  26. Diogenes pretty much has it right:

    “Welcome to the Brave New World, pals.”


    Monday, Aug 22, 2011

    How Washington lost faith in America’s courts
    By Karen Greenberg

    From the assassination of bin Laden to the abuse of Manning, the rule of law has collapsed in the decade since 9/11

    As the 10th anniversary of 9/11 approaches, the unexpected extent of the damage Americans have done to themselves and their institutions is coming into better focus. The event that “changed everything” did turn out to change Washington in ways more startling than most people realize. On terrorism and national security, to take an obvious (if seldom commented upon) example, the confidence of the U.S. government seems to have been severely, perhaps irreparably, shaken when it comes to that basic and essential American institution: the courts.

    If, in fact, we are a “nation of laws,” you wouldn’t know it from Washington’s actions over the past few years. …..

    “In the recent jury decisions, as in the growing expressions of judicial dissatisfaction, an optimist might find signs that the system is finally starting to right itself.

    On the other hand, a pessimist might come to the conclusion that the government will, in the future, simply put even more energy into avoiding the court system.”

  27. https://jonathanturley.org/2011/01/17/spiritual-corruption-chavez-jails-judge-who-granted-bail-to-banker/

    Buddha Is Laughing 1, January 17, 2011 at 10:59 pm

    Months ago, Buddha Is Laughing wrote”

    “It goes something like this: thievery unjustly deprives a person of their property and is inherently inequitable.

    In addition, if unpunished, it encourages vigilantism and creates general conditions of lawlessness when the government does not intervene on behalf of the rightful owner to punish the thief and/or recover the property if possible. In order to be equitable and to promote justice as defined by the Constitution as an ethical duty of government, thievery must be made illegal and the police allowed to arrest thieves and the judiciary to prosecute them in accordance to the procedures and rights found within the Constitution.”

    I miss that voice…

    Again, to highlight this point, he wrote:

    “In addition, if unpunished, it encourages vigilantism and creates general conditions of lawlessness when the government does not intervene on behalf of the rightful owner to punish the thief and/or recover the property if possible.”

    Vigilantism and lawlessness are what we have, though most aren’t seeing the worst of it, yet. Left unchecked, it will only get worse. As Mike A. said, “The actions of the Administration in this instance are irresponsible and not at all in the public interest. I hope that Mr. Schneiderman stands his ground.”

    So do I. But hope is waning…

  28. “Inherent in Schneiderman’s warnings was an implication that officials negotiating the current deal are willing to give away too much, a suggestion that those involved in the talks describe as inaccurate and infuriating. Several people familiar with the talks said those at the negotiating table have never considered granting banks immunity from claims related to the securitization process, nor have they sought to prevent Schneiderman and others from pursuing broader investigations into other issues, such as securitization, fair housing claims and criminal fraud.”

    This comment taken from Elaine’s 9:15pm posting of a Washington Post editorial infuriates me. Notice how Schneiderman’s fears are directly quoted and then denied by “several people familiar with the talks”. Who are these people? This is a typical Beltway leak article where those responsible are granted deniability because what they’re implying may well be untrue.

    What I find even more bothersome though is that this Administration that lacks the guts to stand up to direct, scurrilous attacks by its opponents, ignore defections from its’ own partisans on key Democratic issues, is able to try to bring force to bear on one of its’ most progressive and courageous people. This is not the change I voted for, but it is confirmation that both political party’s leadership are under Corporate dominance.

    We need a strong third party in our country to break this stranglehold. I’m not sure we’ll get one though. The problems with the Green Party and others, is that they try to build from the top down, eschewing local organization, which is the backbone of any political movement. The fight should occur in each Congressional District certainly, but also in each School Board ideally. The Right Wing has learned this lesson well, but organizing the rest of us is like herding cats. The Extreme Right naturally attracts those who respond to top-down leadership, the rest of us who are more eclectic of thought don’t like to be led, which is both our strength and our weakness.

  29. rafflaw:

    In the cases I’ve handled, the judges do look at the files, but that is because I specify the defects in the files. I do not believe that judges desire to clear their foreclosure dockets at the expense of homeowners, but we all know that judges review what lawyers present to them. And while there are incompetent foreclosure lawyers, there are also incompetent foreclosure defense lawyers.

    There are also incompetent judges, of course, but I lay the blame for the foreclosure problems in the courts squarely on the shoulders of the bar. Here in Florida there are law firms that turned foreclosures into money machines, filing thousands of fraudulent documents, many of them generated by the firms themselves. Several firms have been investigated and lawyers have been disbarred for these actions.

    But what all of this ultimately means is that the investigation should not be short circuited to protect bank shareholders.

  30. Anon Nurse,

    Re: your links, everyone knows that Iowa is much more important in financial industry affairs than New York.

  31. Mr. Spindell,

    Regarding your comment concerning a solution being a new 3rd party…

    I would certainly support that but I don’t personally see the solution as laying “out there somewhere.” There’s been much animosity directed towards “the rich” and the “class wars” but it hasn’t resonated with me.

    I see our predicament as one of acceptance of lies. Point blank: the enemy is OUR comfort with lies.

    And so regardless of 3 parties, or 2 parties, or however many, in and of itself can not repair the damage. Until people stop lying to themselves and stop accepting other people lying to them, whoever heads up the new 3rd will only end up compromised, just like Obama. Because the fix is within. It’s okay to lie.

    It was only after I stopped believing my own lies that I could no longer tolerate those who lie to me. It was myself I had to overcome first.

    The solution is to stop lying to ourselves, and to support politicians to don’t lie, regardless of however intolerable their views may seem. Better to have an honest disagreement directly than to have someone agree with you and end up working against you behind closed doors.

    Fucking Obama.

    My rage borders on annihilation.

  32. Rafflaw,

    Your prefer I lie to myself about my emotions?

    If it’s better that I choose not to share them, what’s the point of being here? When I can no longer be truthful, you’ll never see me again.

    On another note… I’ve heard it said the truth hurts sometimes. Through experience, I’ve discovered that isn’t true. The truth heals. It’s not knowing it that hurts.

  33. Here’s the Next ‘Madoff Fraud’: Whistleblower
    August 24, 2011

    The man whose emails detailing Bernie Madoff’s Ponzi scheme were ignored by the Securities and Exchange Commission has a new target — foreign exchange fraud.

    Harry Markopolos, an independent financial fraud investigator and the subject of a film, “Chasing Madoff,” opening Friday, told CNBC Wednesday “State Street [STT 34.52 0.44 (+1.29%) ] and Bank of New York [BK 20.34 -0.01 (-0.05%) ] each stole billions of dollars from pension funds around the country, three-tenths of one percent off every transaction,” he said.

    Pension funds are often major players in international investments and need foreign currency to complete those overseas transactions. Banks typically supply those currency services as part of a package of services for the pension funds’ business.

    “If you’re a credit card holder and you go to Europe, and your bank charges you 3 percent for a foreign currency transaction, well, that costs them maybe three basis points” so they get a huge markup, he pointed out. He said the two banks hid the charges in what was contracted as a free service. Other banks, such as Capital One [COF 43.97 0.19 (+0.43%) ], have done away with forex fees.

    With $4.7 trillion in foreign exchange trades every day, no government regulatory oversight and everything over the counter, forex is “a perfect recipe for fraud,” he said. There are legal actions already taking place against the banks in California and Virginia but “it’s a 50-state case. It will be many billions [of dollars] by the time it’s over.”

  34. “There’s been much animosity directed towards “the rich” and the “class wars” but it hasn’t resonated with me”


    I don’t think it is possible to deny that “class warfare” is occurring here, but unlike in political theory and in times past, the “war” has been initiated by some of those with wealth. The biggest burden of taxation has been taken from the wealthy and placed upon the backs of our middle class and small business owners. The gap between the wealthiest people and the rest of us has grown exponentially since the 80’s. Most people in this country are not “class warriors” in the classic sense, in fact they only dimly realize that this is going on and that it is a direct attack on them.

    That is because they still are trying to believe in the fiction of the American Dream and because they are too busy holding the heads of themselves and their families above water.

    “It was only after I stopped believing my own lies that I could no longer tolerate those who lie to me. It was myself I had to overcome first.”

    The road to mental stability starts with the ceasing to believe ones’ own lies and I see you are well on that path. Discerning other’s lies is harder task because our society is be-sodden with propaganda and the tasks of earning one’s living makes it hard to put in the time necessary to separate truth from lies. Our educational system contributes to the inability to discern lies by presenting both a false and incomplete history of our country. Lying to the people is one of the oldest characteristics of human societies and I doubt that will change any time soon.

    My suggestion about a 3rd Party though, is I know a precariously facile one and if you noticed I even expressed skepticism as to whether it can be done. Regarding your dislike of the President I understand where you are coming from, because I myself am quite disappointed by his performance.
    However, our current situation dates back to the Country’s founding and the original acceptance of slavery in our constitution. From the original lies came years of giving the public mythology, rather than the facts.

    Our current economic disparity and despair dates from the Reagan Administration and its acceptance of Corporate dominance. This was the beginning of the export of jobs and the creation of American Corporation as multi-national entities. It also was the start of the destruction of the Union movement as a counter balance to corporate power. Obama’s performance has been poor, but we must not forget that the economic collapse came under Bush II and was tied to the dismantling of Smoot-Hawley under Clinton. Our massive deficit is the result of the Bush Tax cuts on the rich and the starting of two expensive, unneeded wars, using the lie of “The War on Terror”.

  35. “Anon Nurse,
    Re: your links, everyone knows that Iowa is much more important in financial industry affairs than New York.”

    “Mike S.,
    Could you elaborate…”

    If the elaboration was on my statement above, it was an attempted piece of snark. My point is that New York State is the home of our country’s banking system and that any committee dealing with financial fraud is better served by having NYS’s chief law enforcement on it, rather than someone from Iowa.

    “Iowa Attorney General Tom Miller (glasses) increased his campaign contributions from the finance sector this year by a factor of 88!” – with credit to Taibbi, I believe…”

    I think you answered the question of not only Miller’s chairmanship, but also his placement on the committee.

  36. Nate-

    The point rafflaw was making was simply this:

    You believe in free speech, rafflaw believes in free speech, I believe in free speech, Prof. Turley believes in free speech- the Secret Service does not believe in free speech.

  37. Heard something on National Public Radio a few days ago saying that someone who worked for SEC has turned Whistleblower and said that over 90 investigation files at SEC were destroyed.

  38. anon,

    It’s more than 9,000 documents about preliminary investigations (MUIs) that were destroyed. I posted about it a few days ago:

    Securities and Exchange Commission Accused of Shredding Investigation Documents for Nearly Twenty Years


    Read Matt Taibbi’s Rolling Stone article about it:
    Is the SEC Covering Up Wall Street Crimes?
    A whistle-blower claims that over the past two decades, the agency has destroyed records of thousands of investigations, whitewashing the files of some of the nation’s worst financial criminals.

  39. If I’m the defective one for feeling so overwhelmed by these unending injustices, I’ll work on fixing myself.

    Let’s hope it’s that, it’s much the easier solution.

  40. One more little gripe to release…

    Buffett just invested $5 billion into BofA, thereby lending his name to the bank whitewash. I imagine he probably got news through the grapevine that the Obama administration is stepping in to oil the process. BofA stocks being so battered by the market since the fall of ’08, putting the scandals in the rearview mirror and Looking Forward will cause that stock to bounce back.

    That’s one shrewd money-maker.

    He seems to be okay with making profits from people’s corruption and society’s harm.

    I remember a question posed to him about “how can I make a lot of money?” He held his nose and pointed to Wall Street. Years later he buys in with Goldman Sachs, some of the largest stench producers of modern times.

    I just shake my head in disbelief. And wait for my final transaction to clear my checking account at BofA before I go and close it. I want nothing to do with them.

  41. obama has proved he is a corporation whore, we should of listened when Supreme Court Justice called him a liar, He had it right, The Obama Loan Modify was a SCAM from the begining, We were getting emails back from Obama Nov 2010 telling us it was our fault that the Mortgage Fraud was happening, this man is a terrorist, He is not an American, I agree with Trump something is still fishy about that Birth Certificate, He is a despicable POS we should not trust him or his Administration. He helped to cause the mortgage crisis w/bank of America and chase bank for reasons unknown,He has put us in a Depression now he wants his butt buddy bankers to go out without a single criminal charge, this is BS.

  42. It’s supposed to start at 6:30 sharp, but I doubt it will.Don’t keep me waiting long.Opportunity knocks but once.I want to take a walk along the river bank, singing my favorite songs.I can’t afford a new car.The best-known movie awards are the Academy Awards.The best-known movie awards are the Academy Awards.Do you accept credit cards? Love me,love my dog.I have just heard from my sister, Mary.

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