Saturday, January 28, 2012

So maybe Eric Schneiderman hasn't sold out after all to a cabal of the banksters and the Obama administration


BILL PRESS: Is President Obama really a populist, or does he just play one on television?
MATT TAIBBI: When it comes to the Wall Street stuff that I cover, there's a lot of enthusiasm. Even in the last ten minutes actually before the show happened, there's news coming out about this long-anticipated foreclosure settlement, that it looks like it's a much, much better deal than anybody ever anticipated . . .
BILL: For consumers? Or banks?
MATT: For people, and not for banks. The expectation from people like me . . .
BILL: Right.
MATT: . . . for a long time was that this would actually be the equivalent of a giant TARP-size bailout -- in other words, that they were going to allow these banks to escape perhaps a trillion dollars in liabilities. But they've narrowed the focus of this deal so that it really only covers a small amount of liability, and it still leaves these banks incredibly exposed to all kinds of criminal investigations. That's an enormous victory if that ends up being true.

by Ken

Let me stipulate at the outset that I have never been personally closer to NYS Attorney General Eric Schneiderman than walking past his old district office, when he was a New York State senator, every time I took the A train rather than the no. 1 up- or downtown to or from my way-northern Manhattan domicile. But as I say, he was my senator for a bunch of years, despite the best efforts of a lot of people -- and I don't necessarily mean people of the rival party, of which there's not much evidence up our way -- to get his troublesome butt the heck out.

It was hard not to develop large reserves of admiration and respect for Schneiderman's smarts (very considerable) and for his tenacity and integrity (ditto). And I know enough people with access to NYS's political netherworld to confirm that what we saw from the outside was what inside pols were having to deal with. The politically savvy NYers I know were uniformly jubilant -- and these are people not much given to political jubilation -- when he managed to edge out a crowded field in the Democratic primary to succeed Eliot Spitzer as state attorney general, and then when he stoutly held off what was feared to be an ugly and well-financed challenge in the general election.

So I didn't know what to make of it when people on the progressive side of the political spectrum, people who claim access to all manner of inside knowledge, in recent days were writing Schneiderman off as a sellout, witting or otherwise, when he signed on to co-chair the Obama administration's newly created interagency Financial Fraud Task Force (here, for example, and here, for another). He was only to be "co-chair," they stressed, with the hardly inspiring U.S. Assistant AG Lanny Breuer the other co-chair.

In the most charitable interpretation, they were saying, the poor schlub had been coopted, greasing the way for acceptance of a settlement by the state attorneys general with the mortgage banksters whose dubious mortgage practices did so much to make the economy go whoosh. Now, so the drumbeat from this segement of the Left insisted, not only was the way clear for the state AGs to ram through a settlement (which had been most tellingly resisted by a small group of AGs including Schneiderman and California's Kamala Harris) that was sure to be a financial reprieve if not actually a bailout for the banksters, but the paper-tiger federal task force would protect them from any further serious poking around by state or federal prosecutors.

Then a funny thing happened -- sufficient to make Matt Taibbi, no less, declare himself "almost optimistic." My goodness, Matt T almost optimistic? Here's his blogpost today.
A Victory for the Public on Foreclosures?

POSTED: January 28, 12:07 PM ET

So there was big news yesterday on the foreclosure settlement front. We still have to wait and see what the final deal looks like, but there are reports out that the long-awaited settlement is a far, far better deal for the public than expected. If these reports are true, it looks like New York Attorney General Eric Schneiderman and California AG Kamala Harris have scored an enormous victory in narrowing the scope of the settlement to the point where it really only covers robosigning abuses.

According to reports (like this one in the Huffington Post ["Obama Administration And Banks Near Deal On Mortgage Fraud Legal Liability" by Sam Stein and Zach Carter]), the deal will not include:

1. Criminal liability.
2. Tax liability
3. Fair lending, fair housing, or any other civil rights claim.
4. Federal Housing Finance Agency or the GSEs [Fannie Mae and Freddie Mac]
5. CFPB claims for the period after they came into existence in July 2011
6. SEC claims
7. National Credit Union Association Claims
8. FDIC claims
9. Federal Reserve Board claims
10. MERS claims

If that is true, and all of those things are out of the deal, and the banks are still exposed to liability not only for all of those things, but also for the broad range of offenses related to securitization, then $25 billion, dare I say it, might not even be a completely sucky number. It's far less than the real liability, but it's a much bigger sum than I ever thought would be negotiated just for robosigning.

I'm interested to see what the market reaction will be if this deal goes through. On the one hand the banks will all obtain some certainly and relief from robosigning claims. But on the other hand, all the banks are still on the hook in other areas, nost notably putbacks of bad loans.

Score one for Schneiderman/Harris. Coupled with the news that the subpoenas have already started dropping ["New Fraud Investigation Group Issues Subpoenas to Financial Companies" by Edward Wyatt on HuffPost] on the securitization front, I'm almost optimistic.

Then Matt notes that he "talked more on this with the excellent Bill Press on Countdown last night," and offers the clip I've put at the top of this post.

It's enough . . . well, enough to make Matt Taibbi almost optimistic!


One point that's always made by the people who have followed his career most closely is that he has a history of getting things done. And not the way the Obama crowd usually manages it, or claims to: by watering down any principles they might have to the point where the "accomplishments" depend on an exceedingly liberal interpretation of "something" and "done." Schneiderman apparently has a way of "bringing people around" and forging coalitions. What he's not much known for is compromising his principles.

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At 7:01 AM, Blogger lawguy said...

There is a reason to think that nothing will come of this since Obama has a nearly 100% failure rate when it comes to dealing with Wall Street. I mean failure in the sense that he promises to do something for most of us and then doesn't.

My guess there is until the election for something to happen, then no matter who is elected that opportunity will go away.

At 8:43 AM, Anonymous me said...

It sounds good, but I'll believe it when I see it.

As we all know, O'Bummer has a history of sounding good, and a history of handing out taxpayers' money to the banks. He also said during his last campaign, "No one is above the law." Then he promptly put Bushco above the law.

I don't trust him AT ALL, not one little millimeter.

At 8:44 AM, Anonymous me said...

PS. I tried to watch the video, but they wanted to force me to watch some goddamned commercial for some goddamned shit that I will never buy, so I turned it off.

I know that's youtube's fault, not yours; I'm just saying. I don't watch commercials, and when I am tricked or forced into seeing them, I go out of my way NOT to buy whatever crap is being pushed at me.

"Advertising is the rattling of a stick inside a swill bucket." - George Orwell


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