Yves Smith: Corrupt Obama Admin pressuring NY AG To Support Mortgage Whitewash

[brentspeak]

No mincing of words here:

http://www.nakedcapitalism.com/2011/08/corrupt-obama-administration-pressuring-new-york-attorney-general-to-support-mortgage-whitewash.html

Monday, August 22, 2011


Corrupt Obama Administration Pressuring New York Attorney General to Support Mortgage Whitewash

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

(snip)

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 http://www.nytimes.com/2011/08/22/business/schneiderman-is-said-to-face-pressure-to-back-bank-deal.html?pagewanted=1&_r=1">background of Smith's piece: NY state attorney general Eric Schneiderman's unwillingness to go along with a proposed settlement between the large banks and the Obama administration -- a settlement which would, in effect let the banks off the hook for any criminal charges they might face for engaging in possibly illegal mortgage activities.

However, as the NY Times article notes, the Obama administration is exerting great pressure on Schneiderman for him to drop his opposition to the settlement:

http://www.nytimes.com/2011/08/22/business/schneiderman-is-said-to-face-pressure-to-back-bank-deal.html?pagewanted=1&_r=1

In recent weeks, Shaun Donovan, the secretary of Housing and Urban Development, and high-level Justice Department officials have been waging an intensifying campaign to try to persuade the attorney general to support the settlement, said the people briefed on the talks.

Mr. Schneiderman and top prosecutors in some other states have objected to the proposed settlement with major banks, saying it would restrict their ability to investigate and prosecute wrongdoing in a variety of areas, including the bundling of loans in mortgage securities.

But Mr. Donovan and others in the administration have been contacting not only Mr. Schneiderman but his allies, including consumer groups and advocates for borrowers, seeking help to secure the attorney general’s participation in the deal, these people said. One recipient described the calls from Mr. Donovan, but asked not to be identified for fear of retaliation.

Not surprising, the large banks, which are eager to reach a settlement, have grown increasingly frustrated with Mr. Schneiderman. Bank officials recently discussed asking Mr. Donovan for help in changing the attorney general’s mind, according to a person briefed on those talks.

And, from the following quote, it appears that the administration has ordered the Justice Dept. to collude with the Housing and Urban Development agency on this issue:

And Alisa Finelli, a spokeswoman for the Justice Department. said: “The Justice Department, along with our federal agency partners and state attorneys general, are committed to achieving a resolution that will hold servicers accountable for the harm they have done consumers and bring billions of dollars of relief to struggling homeowners — and bring relief swiftly because homeowners continue to suffer more each day that these issues are not resolved.”

Wait a minute, wait a minute: Why would the Justice Dept, supposedly and ideally an independent arm of the administration, not be interested in pursuing criminal charges against the banks on this matter? Why would the Justice Dept. claim that all the state attorney generals want to reach a settlement with the banks, when, in fact, that's not the case: as the article points out, some of the state attorney generals don't want to reach a settlement with the banks; they want to look into possible criminal charges against the banks. Why would the Justice Dept. suddenly be keenly interested in on the non-Justice Dept issue of homeownership and echo the exact position of the Housing and Urban Development?

[tblue]

1. If a Pres. McCain had done this

who here would have remained silent?

I have no idea how to defend it.

[Name removed]

2. Deleted message

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[Name removed]

5. Deleted message

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[tblue]

7. We did. You did. I did. We all did.

Just some of us aren't ready to face it. It's not hard to cherry pick when you're in a cherry orchard.

[emilyg]

8. You did. I voted for Clinton.

[IcyMedic]

9. Same..

Though I did vote for Obama in the general election, I don't think Hillary would have done this.

[Sheepshank]

12. Dream big...because that's all you have

All you have is the magical dreams of perfection, when there is no reality to slap you awake.

[INdemo]

10. Actually as a Democrat I will be voting for a Republican

if I hold my nose and vote fopr Obama..That would make the second Presidental election in a row that Ive voted for a Republican

[okieinpain]

13. lol, yeah he's a repug, evil president obama. n/t.

[woo me with science]

3. K&R nt

[ProSense]

4. More idiocy

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

From the NYT article.

<...>

In an interview on Friday, Mr. Donovan defended his discussions with the attorney general, saying they were motivated by a desire to speed up help for troubled homeowners. But he said he had not spoken to bank officials or their representatives about trying to persuade Mr. Schneiderman to get on board with the deal.

“Eric and I agree on a tremendous amount here,” Mr. Donovan said. “The disagreement is around whether we should wait to settle and resolve the issues around the servicing practices for him — and potentially other A.G.’s and other federal agencies — to complete investigations on the securitization side. He might argue that he has more leverage that way, but our view is we have the immediate opportunity to help a huge number of borrowers to stay in their homes, to help their neighborhoods and the housing market.”

And Alisa Finelli, a spokeswoman for the Justice Department. said: “The Justice Department, along with our federal agency partners and state attorneys general, are committed to achieving a resolution that will hold servicers accountable for the harm they have done consumers and bring billions of dollars of relief to struggling homeowners — and bring relief swiftly because homeowners continue to suffer more each day that these issues are not resolved.”

<...>

Yves Smith spends all her time spinning corruption by cherry picking rumor from MSM articles and anti-Obama blog posts. The basic premise is to give the impression that the admistration is doing nothing about the financial fraud that led to the crisis. Her hyperbole based on the NYT article is absurd!

Foreclosure Talks Snag on Bank Liability

<...>

U.S. and state officials dismissed the push for broad immunity as a "nonstarter," according to a federal official involved in the talks, but they have countered with a narrower offer. It would cover robo-signing and other servicer-related conduct but leave banks open to potential legal action for wrongdoing in fair lending and securitization, according to people familiar with the situation. Attorneys general in California, Delaware, Massachusetts and New York have said they are investigating mortgage-securitization practices.

<...>

Nevada Attorney General Catherine Cortez Masto said she is "going to be very cautious" about any release that could affect investigations or litigation. Ms. Masto has alleged that Bank of America violated the law in its handling of troubled loans. "A broad release isn't going to do … any good (for me) or the people of my state."

Massachusetts Attorney General Martha Coakley recently said she won't let banks escape potential legal liability for claims related to securitization and use of the Mortgage Electronic Registration Systems "until we know all the facts and all of the damage." Doing otherwise "is like buying a used car without looking under the hood. There's a good chance you will get a lemon."

<...>

Delaware Attorney General Beau Biden has also begun investigating securitization and other mortgage-industry practices. "We would oppose any settlement that would release claims broader than servicing conduct," says Delaware Deputy Attorney General Ian McConnel."That would include origination, securitization and (Mortgage Electronic Registration Systems) claims."

Why the bank-settlement talks are likely to drag on indefinitely

Today brings dueling stories in the NYT and the WSJ on the status of the bank foreclosure-settlement talks. At issue is the question of whether the banks should be given immunity with respect to lawsuits surrounding their securitization shenanigans. Here’s the WSJ, saying quite clearly that they won’t:

U.S. and state officials dismissed the push for broad immunity as a “nonstarter,” according to a federal official involved in the talks, but they have countered with a narrower offer. It would cover robo-signing and other servicer-related conduct but leave banks open to potential legal action for wrongdoing in fair lending and securitization, according to people familiar with the situation. Attorneys general in California, Delaware, Massachusetts and New York have said they are investigating mortgage-securitization practices.

In the NYT, by contrast, Gretchen Morgenson says that New York’s Eric Schneiderman is pushing back against a federal attempt to give banks immunity on such matters:

Mr. Schneiderman and top prosecutors in some other states have objected to the proposed settlement with major banks, saying it would restrict their ability to investigate and prosecute wrongdoing in a variety of areas, including the bundling of loans in mortgage securities.

So, is immunity with respect to mortgage securitization a nonstarter, or is it the whole reason why banks would dream of signing the settlement in the first place? I suspect it might be both. If I was a bank, I wouldn’t dream of paying billions of dollars in return for a narrow settlement precluding further prosecution about robo-signing and the like: it just wouldn’t make economic sense to do so. At the same time, if I were Schneiderman, in the middle of a detailed investigation into what banks’ mortgage departments got up to in the run-up to the crisis, I certainly wouldn’t want that investigation rendered moot and toothless before it had even been concluded.

<...>

[banned from Kos]

15. Ms. Smith can certainly dish out the propaganda and lies

and she has the audacity to use the term "Ministry of Truth".

She should know better. Unlike Matt Taibbi she has an education.

[brentspeak]

16. What "propaganda"? What "lies"?

Please explain, in detail, precisely what portions of Yves Smith's article constitute "propaganda and lies", and why they fall under that category.

Waiting...

[abelenkpe]

6. Yves is pretty harsh on the Obama Administration

but it is disheartening to see them try to pressure a settlement.

As Jesse's blog says:

"The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained recovery"

http://jessescrossroadscafe.blogspot.com/

And the administration has yet to do much to counter wall street. Granted Republicans have been a huge obstacle to any kind of reform, but democrats haven't put up much of a fight.

[Name removed]

11. Deleted message

Message removed by moderator. Click here to review the message board rules.

[uponit7771]

14. Non sourced non direct quote OP, the Obama bashing is getting counter productive

[bhikkhu]

17. Its basically a civil settlement - benefiting homeowners

which the Obama administration is trying to get, versus criminal settlements, which might not benefit anybody.

I don't see why we can't have both, in any case, as the sole issue behind the administration's settlement deal is robo-signing, which is a very small part of banking malfeasance.

In any case, if you look into what Schneiderman's office has been working on for the past few months, it is largely investigating banks toward the end of recouping losses related to the subprime meltdown, for large investment funds .

This is what we are supposed to support, instead of getting a $20 billion settlement to help homeowners refinance of renegotiate their home loans?