Thursday, January 26, 2012

President Obama's latest move on mortgage fraud...emoprog heads explode (updated)

During his State of the Union speech, President Obama said this:

And tonight, I’m asking my Attorney General to create a special unit of federal prosecutors and leading state attorney general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans.

Just prior to the speech, Sam Stein published this exclusive about that unit that struck me as a bombshell.

During his State of the Union address tonight, President Obama will announce the creation of a special unit to investigate misconduct and illegalities that contributed to both the financial collapse and the mortgage crisis.

The office, part of a new Unit on Mortgage Origination and Securitization Abuses, will be chaired by Eric Schneiderman, the New York attorney general, according to a White House official.

The reason this is such a big deal is that there have once again been rumblings that the negotiations that have been underway for over a year now between 5 banks, 50 state attorney generals, and 5 federal departments might be about to finalize a deal. So lets remind ourselves what has been happening there.

First of all, those talks are about a civil case on a very specific aspect of the mortgage crisis: the bank's use of robo-signing as part of the foreclosure process. NY Attorney General Schneiderman became a prominent hero to the professional left when he criticized the talks to the point that he was kicked off the executive committee managing them by the leader Iowa Attorney General Tom Miller. As I wrote in the article linked above, Schneiderman's concerns were very specific:

The principle conflict seemed to be over whether the settlement being negotiated with the banks would grant them immunity beyond the issue of foreclosure fraud. Schneiderman wanted to maintain NY's ability to prosecute the banks for things like the practice of assigning and bundling mortgages into securities.

Notice what Stein reported as the name of this initiative Schneiderman will co-chair: "Unit on Mortgage Origination and Securitization Abuses." So what we have here is the possible conclusion of the settlement talks about robo-signing in the foreclosure process and the beginning of work on the investigation of the issues involved in mortgage origination fraud and any criminal activity involved in bundling them into securities. Given Schneiderman's passion and commitment to the later, it makes perfect sense for President Obama to ask him to co-chair that effort. It means the administration is serious about the matter.

At least that's the way you'd see this move if you weren't suffering from Obama Derangement Syndrome (ODS). If you are, then your head explodes (warning: bagger of fire link) a little trying to figure out how to spin this one.

That upsets the entire balance of power with respect to the settlement. If Schneiderman joins, it undermines the group of “Justice Democrat” AGs who were working on how to deal with investigations in the absence of a settlement...

This is a classic Obama move, putting a threat or a rival inside the tent. It happened with Elizabeth Warren and David Petraeus and Jon Huntsman, and it’s happening again...

I’d really like to be wrong about this. But this just reads like a gambit, a fix, a charade.

AMAZING! So when President Obama does things you don't like, you criticize him. When he joins with one of your heroes to do what you've been wanting, he's corrupting your hero - who gets thrown under the bus as someone who would participate in a charade. Could there be a clearer example of ODS? I think not.

Update: From the LA Times:

Schneiderman said Wednesday that the new unit's efforts shouldn't affect the foreclosure settlement talks because those investigations deal with conduct that took place after the housing market collapsed.

"The multi-state talks all relate to post-crash conduct. These are abuses in the foreclosure process," he said. "Our working group is focusing on the conduct related to the pooling and creation of mortgage-backed securities...the conduct that created the crash, not the abuses that happened after the fact."

I don't think you can make it any more clear than that!


  1. Love how the van jones/ nation/ fdl/ dkos firebaggers all predicted another betrayal on this.

  2. Let me see. The President decides to solve the issue by allowing the civil settlement to go ahead without allowing immunity for criminal investigations. Then he goes and asks the guy who has been leading the charge for criminal investigation capability to lead the effort in doing criminal investigations. This is considered "a bad thing" by the emoprogs. Right, got it.

    I'm sure they're wondering why people have trouble taking them seriously, or why the phrase "F**king idiots" keeps getting applied to them by people like me.

    1. ebogan63 here.
      This is why I have no interest in hearing how PBO won't prosecute the 'Wall Streeters' any more. If wrongdoing is found and a case can be made, fine. For me, it's all about people staying in their homes, not some revenge fantasies from the PL and left puritans.

    2. Ebogan63,

      You just pointed out the distinguishing feature of progressive frustrati -- their need for revenge. It's difficult to argue against because hey -- we're all human and it's natural to want revenge against those who've delivered injury to us. But putting retribution on hold or even relinquishing a "mission for justice" doesn't necessarily indicate weakness or acquiescense to injustices -- it can be just as likely that retribution gets a lower rank on the priority list than urgent survival issues, like access to fair and humane healthcare, jobs for the unemployed, access to education, food and heating fuel for families, etc. But for some reason, the frustrati choose to go with the first of those two equally likely explanations for the Obama Administration's pursuit of items on the Democratic Party's agenda. Interesting, no?

      Frankly, I'm ready for the professional Left's opportunists' spots to become so visible that they're ostracized into obscurity. Even better -- they can run over to Fox News. The rightwing loves to adopt washed-up loser lefties as pets. ::giggles::

  3. Props also to CA Atty General Kamala Harris, who bailed on the settlement talks because the banks weren't offering up enough to balance their expectations for immunity. I point to her election as another example of why it matters which party governs.

    1. From the reading I've done, Harris' objections have been a bit different from Schneiderman's. You're right in that she had issues with the dollar amount of the settlement because its mostly going to go to people who's mortgages are underwater - a huge issue in CA. Schneiderman wanted to make sure the immunity granted didn't cover mortgage securitization.

      You begin to get a picture of why its been so difficult to get an agreement when there are 50 different AG's with very different regional and political agendas.

      But given how difficult it is in most states to prove fraud and the roll of the dice you take with our current court system, I still suspect a settlement is a better bet.

  4. One of the distinct impressions I got from them early on was that they expected right after being sworn in, President Obama would order the Justice Department to sweep in, arrest everyone on Wall Street, and march them off to jail.

    That financial crimes take a long time to investigate, or that laws may not have been broken didn't matter. Even if a new law was passed making that behavior criminal, you couldn't prosecute. In other words, they weren't paying attention to the legal system at all.

    1. He never promised to send people to prison. That's a fight that's really not worth it. You'll gain more fighting for better healthcare than you can fighting Wall St. Those guys live in a fantasy world. I'm guessing they're like Alex Jones where the government will never be able to do anything right.


    2. "That financial crimes take a long time to investigate,"

      There's also the matter of the moles Bush left behind at DOJ and the delay in getting Assistant AGs confirmed.

  5. Hi SP
    This was such an important post! The PL got out in front as usual and spewed all manner of false suppositions about what PBO was or was not going to do. I hate that they are able to jump the gun, create smoke, muddy the waters and when the truth comes out, all that is left is confusion.

    Thanks for this one.

  6. Ms. Smartypants,

    Thanks for the report and the follow-up. You do a great job of sifting thru and staying focused on substantive progress.

  7. Brilliant, brilliant, brilliant...

    The moment I read Schneiderman's name - I could hear the PL gasps for air.


  8. That big wet spot on your cheek is the huge kiss I just bestowed on it because I've been fighting the "Mortgage Fraud Cave" clowns for days. You just handed me a lot of ammunition.


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