Eric Schneiderman Time

Over the years Ken and I have written a lot about Eric Schneiderman. He used to be Ken's state senator and we were both enthusiastic supporters of his bid for the Attorney General job in New York. Early in 2008 we pointed out that he's far from a "checklist liberal" and had attracted the animus not just of Republicans, but also of the conservative Democratic Establishment. At the time then Senator Schneiderman wrote in The Nation "Transformational politics has been a critical element of American political life since Lincoln was advocating his 'oft expressed belief that a leader should endeavor to transform, yet heed, public opinion'."

In 1977 most Americans didn't think government was the problem. Neoclassical economics was not our national faith. A serious presidential candidate couldn't denounce the theory of evolution. The profound changes in public opinion on these and other issues were brought about by the conservatives' excellent work at transformational politics. And they didn't just do it. They honored it. They celebrated it. And an entire generation of Democratic consultants made millions by advising their clients to stay away from it.

Think about the transformation of America's ideas about taxes over the past thirty years. There has never been any credible evidence that "supply side" policies promote growth, but the relentless advocacy of this peculiar theory has radically shifted most Americans' basic view of taxes. The history of Grover Norquist's antitax crusade is well-known. It features all the essential elements of transformational politics: identify a set of assumptions that control the public's understanding of an issue; develop a language and message to shift those assumptions; maintain a sustained, disciplined effort to bring about that change over a period of years. From the Laffer curve to the Americans for Tax Reform's Taxpayer Protection Pledge, which all candidates were asked to sign--regardless of whether they would actually have to vote on tax reform anytime soon--Norquist mobilized a bipartisan phalanx of elected officials to preach the gospel of tax cuts. And lo and behold, what had once been considered "politically impossible" became inevitable.

Now let's compare the honors and "access" heaped on Norquist and his colleagues with the way most Democrats have treated transformational work. In 1980 a young Senator Al Gore held the first Congressional hearings on global warming. He challenged the fundamental framework for debates about environmental policy, which too often went something like "clean air and water versus faster economic growth." He offered a new way to think about the relationship between progressive economic policies and the environment. Virtually every Democratic official backed away.

Eric was proposing that committed progressives hold Democratic politicians' feet to the fire and prove their claims to being committed to our values, principles and issues. He's doing the same thing today-- on the widest stage of all as he goes after the most powerful and influential Wall Street career criminals. Over the weekend he was dubbed America's most powerful liberal by sneering Beltway hacks and then lauded as someone who Obama should model himself on by Nina Burleigh in Salon.

Schneiderman, like Obama, comes from the low-drama school of political presentation. He doesn't get red-in-the-face mad. He doesn't seduce. He's earnest and self-effacing and pedagogical. But unlike the president, he has a steady refusal to back down and a ready willingness to fight. He is the antihero that boiling mad progressives hope can manacle and perp-walk those responsible for the financial crisis.

Schneiderman may not disappoint. In an interview with Salon in his office, Schneiderman refused to get specific about criminal or civil, jail time or fines. But he made clear that he has committed time and staff to an investigation with goals that go well beyond extracting $20 billion in exchange for release from prosecution, the deal that his fellow state attorneys general have tossed onto the table down in Washington, and which the Obama administration would like to see him sign.

"The people who caused this crash have to be held accountable and I don't detect any diminution in the desire of the people of New York for that basic kind of justice to be done," he said. "Part of this [investigation] is to air this out and expose it so we can make sure it never happens again."

What everyone wants to know, of course, is can he play to win in the contact sport of Wall Street litigation? If, as he says, his time in the New York Assembly taught him that politics was "a contact sport," it was football. The Wall Street game is more extreme, Thai boxing, maybe. I asked him if he thought he had what it might take-- the starch, the fight and the clean trou with which to wade into battle. I asked, or rather told him, his fight was "dangerous."

"Well, we'll find out, won't we?" he shrugged.

...For all his mildness, Schneiderman disdains the current discourse of Washington.

"One of the things that concerns me right now is this effort to rewrite history, to move us away from the fact that it was bad deregulatory moves and greedy, risky conduct that caused this to happen and that it wasn't the fault of the teachers and cops and firefighters who now seem to be the targets of this effort to cut spending. The markets didn't crash because we were paying too much to teachers."

Nice words to hear from someone with subpoena power on Wall Street. But in June, Iowa Attorney General Tom Miller booted Schneiderman off the 50-state AG's committee that's been trying to make its own deal with the banks over mortgage servicing. Miller's spokesman in Des Moines said Schneiderman's desire to go after the big fish-- the investors and banks-- would hurt consumers.

"We are trying to focus on homeowners, not investors," said Geoff Greenwood of the Iowa AG's office.
"We are focused on foreclosure, servicing. We are not trying to address everything under the sun in connection with our financial crisis and we think that by including securitization we are definitely stalling the case, broadening beyond homeowners and potentially pitting homeowners against investors."

Schneiderman responds that he'd rather not "get into a tit for tat" over what happened with the Iowa AG, but insisted that their tack is too narrow. So, he's pursuing a New York-based investigation, which may or may not lead to a separate and better deal, leveraged with depositions and subpoenaed documents revealing facts about the mortgage servicing issues that affect consumers, and also the so-called securitization issues-- the mortgage-backed securities and CDOs, investor products that actually led to the economic crash still playing out on the shabby streets and foreclosed homes of Main Street America.

"The sense of public confidence has been eroded so badly," he says. "People still haven't gotten over the crash and the bailout… and people are not going to be satisfied until they have a sense that those responsible have been held accountable. This was a man-made catastrophe."

Schneiderman said his office is "digging into" earlier phases of the mortgage-backed securities era. "Origination, the pooling of loans by the banks, the securitization, sale," he said, and activities after 2004, when the housing bubble started filling with air, and the numbers of mortgages dropped. "That's when things started to shift and you can see this whole process of-- making money of these securitizations was so profitable, that it didn't stop when it should have stopped."

Around the same time, he noted, investors began scrutinizing MBS more carefully, and diverting money into the more complex but also troubled collateralized debt obligations. As everyone knows in hindsight, the quality of mortgages deteriorated, the quality of securities deteriorated, and it all collapsed. "We are looking at what caused that to happen and what people were doing and what people knew," he said.

A big supporter of Schneiderman's I know attacked Elizabeth Warren as someone who could potentially break the last unbroken progressive heart left in Obama's America. Burleigh ends her piece by warning progressives that Schneiderman doesn't share their discontent with Obama. "I think that he is doing the best he can with a party on the other side that will do things that are really bad for the country just to beat him. We haven't seen this kind of politics in my lifetime. It's the kind of thing you expect in less developed countries." Schneiderman and Warren are taking on the full brunt of the determined forces of domestic fascism. I hope their progressive followers won't break their hearts.