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. 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.

  2. 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.

  3. 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.

  4. 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.

  5. 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.

  6. 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.

  7. “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.

  8. “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”.

  9. 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.”

  10. 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.

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