Assessing Schneiderman’s Task Force Gamble

My latest for FireDogLake. For even more confirmation that the Feds aren’t interested in bank accountability, regardless of the State half of the task force’s intentions, see Congressman Brad Miller on why he’s not the task force Executive Director and Richard Eskow on the obviousness of the problem. 

As people increasingly realize that the mortgage settlement was an enforcement fraud, attention’s turned to the “new“ joint Federal/State task force that’s supposed to make the settlement into a “down payment,” by delivering much more. And so far people don’t like what they see, and are saying so. What’s striking about the resulting PR push back, however, is that it just highlights how banker-fraud-friendly our federal government is.

For example, Attorney General Eric Schneiderman penned a Daily News Op-Ed in which he pitches “More than 50 attorneys, investigators and analysts have already been deployed to support our investigations, with many more on the way” as somehow adequate to deliver on that “down payment” promise when the Savings and Loan crisis took over 1,000 and Enron alone took over 100. Not only hasn’t the federal government corroborated AG Schneiderman’s claim of “many more on the way”; “many more” than 50+ doesn’t sound like anywhere near the 1,000+ needed to approach the ballpark of accountablity.

Indeed, the only reporting on staffing beyond the 50+ promised to date comes from Reuters, which details efforts to hire a handful of additional prosecutors and experts as evidence the government’s serious. (Yippie! A whole 10 new prosecutors and 5 experts!)  Now that’s serious federal commitment to the task force! And note this line from the Reuters piece:

“The task force formed earlier this year represents a more coordinated effort than prior investigations, the Justice Department official said in an interview on Thursday.”

Really? Only now, during a tough Presidential re-election campaign, five years after the profound bank frauds started coming to light, is the Justice department serious enough to get its investigations coordinated? Justice convicted WorldCom CEO Bernard Ebbers faster.

Or consider The American Prospect‘s long paean honoring NY AG Eric Schneiderman as “The Man The Banks Fear Most.” Note what it reveals about the Feds’ law enforcement zeal:

“The [Obama] administration…had proposed that the banks come up with $20 billion for aggrieved homeowners and former homeowners. Schneiderman wasn’t satisfied. What documents, he asked, had been subpoenaed? None, he was told. Who’d been called in to testify? Nobody, he was told.

The federal government wanted a hush money deal, saying to the bankers: pay us what we want and we won’t ask any questions. And when AG Schneiderman actually dared investigate, the feds responded by pushing him to shut down his investigation and take the enforcement fraud mortgage settlement:

“By June, the Justice Department had outlined a settlement that both Democrats and Republicans could support—all but Schneiderman and Biden. The reaction to their obstinacy was swift. High-ranking administration officials made calls to some of Schneiderman’s leading supporters, arguing that his investigative zeal shouldn’t delay a settlement.”

On what track record–on what set of objective facts–does AG Schneiderman think the federal part of the federal-state task force is interested in bank accountability?

The American Prospect paean goes on to discuss the mortgage settlement as if in an alternate reality, one in which the settlement gave homeowners meaningful principal reduction (not), stopped servicer misconduct (not), and stopped foreclosure fraud (not). As a result, I can’t vouch for the whole piece’s accuracy. Nonetheless others have already reported the settlement was based on very little investigation, and it’s not really news the feds have been soft on banker crime.

Even AG Schneiderman’s willing to implicitly acknowledge the no-enforcement fed’s track record. In the American Prospect piece he defends taking the gamble on making the task force real, not promising it is real:

Given the administration’s refusal to so much as look at bank criminality during its first three years, a number of progressives have expressed fear that the administration is taking Schneiderman for a ride, that it wants only to say the right thing through the election, at which point it will dump his investigation. Schneiderman doesn’t buy that critique….But he understands the gamble he’s taken if it turns out, as the critics charge, that he’s signed on to a Potemkin investigation.

…if the investigation doesn’t become real, he will have to choose between denouncing the president in an election year or becoming party to something he spent a year denouncing.”

So whither the task force? Did AG Schneiderman take a good gamble, or is he just being a tool?

Well, NPR just did a puff piece on U.S. Attorney General Eric Holder titled “Holder: ‘More Work To Do’ Before Term Is Over” that suggests AG Schneiderman’s going to lose his bet. Consider what Holder says still needs doing:

“But I think there’s still, you know, there’s more work to do,” he hastened to add. “Although I’ve become contemplative … I’m not going to glide through the tape. I want to run through it.”

“Still on the agenda: protecting voting rights; holding BP accountable; and defending national security.”

Holding BP to account, but not the bankers… Good luck with that task force bargain of yours, AG Schneiderman.

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