Wall Street wins again [View all]

via Carlos, Occupy Fights Foreclosures, calling this a "must-read".

http://www.salon.com/2013/02/13/wall_street_wins_again/

Consider the first of the few major cases to specifically come out under the aegis of the RMBS working group. New York A.G. Schneiderman brought a suit against JPMorgan Chase over Bear Stearns’ fraudulent misrepresentations of mortgage-backed securities to investors. The case, filed nine months from the start of the non-task force (but, strategically, one month before the presidential election), borrowed liberally from private litigation brought against Bear Stearns two years ago by the mortgage bond insurer Ambac. The lawyer who authored that case, Karla Sanchez, left Ambac’s law firm, Patterson Bellknap Webb and Tyler, and went to work as an executive deputy attorney general for one Eric Schneiderman. In other words, the big case from the vaunted “task force” was basically written two years earlier, by a lawyer working in Schneiderman’s office, with virtually no new information added to the claims. Schneiderman could have filed this case any day over the last two years, without a scintilla of outside participation. Subsequent cases also appear cribbed from either private litigation or existing investigations, and include little that’s new or noteworthy.

This P.R. effort served the interests of everyone involved except the interests of justice. The Obama administration desperately wanted to complete the settlement with the biggest banks over the ongoing activity of foreclosure fraud, and wanted to get a growing outcry for holding bank fraud accountable under control before the election. Schneiderman wanted the president’s seal of approval, and to project a positive image among progressives for “going after” the banks. The banks wanted to settle as much of their liability as possible, protecting their profits and keeping executives out of jail. They all got what they wanted.

The progressive groups who paid lip service to seeking bank accountability didn’t get what they claimed to want. But they should have thought of that before jumping in with Schneiderman and offering unreserved praise for the un-task force before it even began to reveal itself as a fake. The day of the announcement, the Campaign for America’s Future, MoveOn.org, the New Bottom Line, the AFL-CIO, the Campaign for a Fair Settlement and more all sent out glowing press releases touting the president’s leadership and the tremendous opportunity presented by the task force. MoveOn called it “the biggest victory yet for the 99%.” This was farcical. The announcement collapsed the unified front against the foreclosure fraud settlement, which has delivered little meaningful relief to families and no accountability to Wall Street. The task force never even got started. These groups are now justifying their misjudgment by claiming Schneiderman “got played.” Schneiderman doesn’t see it that way; he said definitively that he would leave the task force if he found it unworkable, and yet he’s not only sticking around but approvingly speaking of its efforts. Someone got played, but it wasn’t Eric Schneiderman.

Maybe these groups who claim to be interested in accountability should have recognized the value of what pressured the White House to set up the diversionary tactic of a task force in the first place: public shaming. Last month’s Frontline documentary “The Untouchables” has had arguably more of an impact on reviving moribund financial fraud cases than anything else. Within a couple of weeks of its premiere, the head of the criminal enforcement division, Lanny Breuer, announced he would step down. Then, DoJ suddenly decided to sue credit rating agency Standard and Poor’s over its conflict of interest in rating clearly fraudulent securities as safe assets, a case it had been investigating for two years. You can view this as an accident of timing; it seems more like a direct response. Shaming has done far more than a pretend task force, though that’s admittedly a low bar. You would think outside pressure groups would have recognized the virtue of outside pressure instead of trying to play an inside game.

(More at the link.)