Falling Out of Love with . . . Eric Schneiderman

When I first heard about NY State Attorney General Eric Schneiderman standing up and pushing back against DC’s rush to settle with Wall St bankers and mortgage servicers over the foreclosure debacle, I cheered.  In fact, I did more than cheer.  I wrote to Schneiderman and thanked him for having the courage and integrity to stand with American homeowners, those who had been abused by unfair [and illegal] business practices, and then further compromised by mortgage modifications and refinancing schemes that turned into a giant con game.

The stories were always the same, particularly with the mod and refi angle.  Homeowners called their lending representatives.  They were encouraged to fill out mountains of paperwork, pay a particular monthly amount, and then [months later] once they fulfilled their obligation?  They were told they did not qualify, would be required to pay ‘x’ amount of dollars upfront or the local sheriff would be knocking at the door.  And not for a friendly ‘hello.’

The bait and switch games have been cruel, destructive and predatory.  The idea that these same financial institutions–unable to produce proper and legal paperwork on many of these properties, the whole robosigning/MERS debacle—were being offered a sweetheart deal including immunity from civil and criminal prosecution was nothing short of outrageous.

Schneiderman stood up first and said, ‘No.’  He was later joined by five additional state attorney generals: Beau Biden [DE], Martha Coakley [MA], Catherine Cortez Masto [NV], Kamala Harris [CA] and Lisa Madigan [IL]. Each has pledged to independently investigate the malfeasance and fraud in the mortgage industry and seek prosecution where warranted.

However, during his State of the Union Address, President Obama announced the creation of a Federal Mortgage Fraud Task Force. To my dismay and that of many others, it was subsequently announced the aggressively independent Schneiderman was joining the DC team.

The immediate question [and I’m glad I’m not alone in this]: Will Eric Scneiderman be sucked into the Washington Borg, be used for window dressing by the Administration or remain staunchly on the side of ordinary Americans, who have been abused and sucker-punched enough.

Though I’m generally an optimist, I have to admit—it does not look good.

As an article at Yves Smith’s site pointed out, the very fact that negotiations with the TBTFs proceed uninterrupted sends up a red flag.  Why proceed with negotiations, offering the banks a back door exit, if you’re running an investigation into fraud?  The composition of the Task Force is also troubling, composed as it is with people from the original Task Force that has done very little.  Consider Eric Holder, for instance—not exactly the poster child of a justice fighter.

Additionally, indications are that a miniscule fraction of FBI agents [10] have been assigned to the Task Force in comparison to William Black’s forensic team [1000] to tackle the S&L scandal.  Matt Stoller stated that the current investigation is on the order of 40x the magnitude and complexity although I actually heard Bill Black say the magnitude was in the 70-80x range.

In the same article, Stoller quotes Eric Holder, who seems to truly believe [or at least wants everyone else to believe] that the Administration and the DOJ have been dedicated to rooting out corruption:

On Tuesday night, the President referenced this initiative, asking us to, “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.”

That is precisely what we intend to do.  And the good news is that we aren’t starting from scratch.

Over the past three years, we have been aggressively investigating the causes of the financial crisis.  And we have learned that much of the conduct that led to the crisis was – as the President has said – unethical, and, in many instances, extremely reckless.  We also have learned that behavior that is unethical or reckless may not necessarily be criminal.  When we find evidence of criminal wrongdoing, we bring criminal prosecutions.  When we don’t, we endeavor to use other tools available to us – such as civil sanctions – to seek justice.  My number one to commitment to the American people is that we will continue to devote significant resources to combating financial fraud and be as aggressive and creative as we can be in holding accountable those who, in violating the law, contributed to the financial crisis.

For example, in just the last six months, the Department has achieved prison sentences of 60, 45, 30, and 20 years in a variety of financial fraud cases charging securities fraud, bank fraud, and investment fraud.   And, just last month, I announced the largest fair lending settlement in history, resolving allegations that Countrywide Financial Corporation and its subsidiaries engaged in a widespread pattern or practice of discrimination against minority borrowers from 2004 through 2008.

Either the Administration and DOJ have done a very poor job of keeping the public abreast of their multiple investigations/prosecutions or the average layperson would refer to this claim as: Don’t trust your lying eyes.

Schneiderman has reportedly stated that if the investigation is not on the up and up, he will publicly step away. He has insisted that the investigative work will be rigorous and unrelenting.

I hope he means it.  I hope the queasy sense I have in my gut is wrong because false champions have become the disheartening rule.

Though I’m more likely to see the glass half full than half empty, I and many others have witnessed the same repetitive pattern:  promising, good-intentioned men and women go to DC, only to be chewed up in the machine.  Or irreparably compromised. And though I’ve always believed Barack Obama inept in leadership qualities, he does have an uncanny ability to disable and defang his opponents. David Dayen wrote a convincing essay to the same effect.

I want to be wrong about this.  I hope the naysayers are wrong, too.

Breaking up is hard to do.

28 Comments on “Falling Out of Love with . . . Eric Schneiderman”

  1. ralphb says:

    Try reading Matt Taibbi’s piece I put in a comment on the last thread, or even dday’s post from yesterday, and I think you just might feel better about Schneiderman and the possibilities of the new task force (I hate that term, it’s too much like commission).

    As for Matt Stoller, when he began extolling the marvelousness of Ron Paul he lost all his Obot credibility with me. When you start blaming the failings of liberalism on FDR and the New Deal, you can promptly kiss my ass.

    • bostonboomer says:

      I agree on reading the Taibbi and D-Day pieces. I’m a litte more optimistic than Peggy Sue is, but I don’t really blame her. I don’t think Sneiderman will roll over for Obama–of course I could be wrong. I think Obama wants to absolve the banks, but he can’t do that in an election year. He may be hoping this group will give him cover, but I don’t think so. I know that here in MA, Attorney Gen. Martha Coakley has been very aggressive in prosecuting and suing big banks.

      • ralphb says:

        It’s not only Schneiderman who would have to roll over. The AGs of CA, MA, DE, and NV at the very least would have to join him and that still leaves 8 others they would have to deal with.

        Maybe I’m a sucker but I don’t see why we should give up before this thing is over and done. We should lament defeat after we have lost, not in the middle of the fight.

      • Fredster says:

        I agree with you bb. Taibbi is, to use the tired old phrase, cautiously optimistic, it seems.

  2. ralphb says:

    “Patriots,” Paul, plutocracy and pseudo-progressives

    I’m with Joe Cannon on this. I think Stoller and his ilk are pathetic useless idiots.

    • dakinikat says:

      I wouldn’t take Stoller’s word on what color the sky is. He appears to have a lot of opinions and no knowledge of anything to back it up. He’s diatribes on economics are are completely uniformed by facts, data, knowledge, and theory. Knowing that, I can extrapolate that he’s most likely worthless on everything else. He doesn’t appear to let anything get in the way of what he thinks; including the facts.

  3. peggysue22 says:

    This is one of those times when I hope I’m dead wrong. But I really do not trust the Administration nor do I accept their insistence that they’ve been pushing to root out corruption from Day 1. Sorry, there’s little evidence of it.

    Btw, Stoller is not the only one questioning the President’s new found populist persona or expressing misgivings.

    That being said, I will happily admit to being overly skittish if proven wrong. God knows, American homeowners need relief and the electorate is long overdue for a sign that the crime spree is coming to an end.

    We shall see.

    • ralphb says:

      I don’t blame you or anyone else for not trusting the administration. I don’t either but then I have don’t trust any politician to do what they say unless they have to do it to get elected. Fortunately, I think Obama may be in that position now.

      • peggysue22 says:

        Trust me, ralph–I’m rooting for you to be right on this one. Even if Obama, Holder and their minions have to be brought kicking and screaming to do the right thing. As long as they do it and give those struggling some relief. And the rest of us . . . something to hang onto.

        The Rule of Law has to be reestablished. Otherwise? We are truly lost.

        Hummmm. Come to think of it, I wonder if these new developments/announcements had anything to do with Jamie Dimon’s whine on Friday? Maybe he’s caught the glint off the guillotine blade hanging over his head.

        Not much sympathy out here in the hinterlands for the TBTFs.

      • ralphb says:

        From what I’ve read, Dimon’s whine was a direct result. It was smile worthy that way.

    • bostonboomer says:

      Frankly, I would never *trust* any president or any politician for that matter–that would be foolish. The point is that the Occupy movement has forced Obama to at least talk differently. I’m not giving up on the possibility of forcing him to do the right thing even if he doesn’t want to. As far as I’m concerned, Holder is useless. I’m going to give Scneiderman a chance. He explained on Chris Hayes’s show that it will take cooperation among state AG’s and the feds to deal with this. I’m willing to wait and see.

  4. I’m short on time but as usual–GREAT post and discussion. I’m skeptical and with Peg in hoping I’m wrong.

    Schneiderman isn’t the problem for me…it’s Obama Admin. They always pretend to toss a bone during election season and then pull the rug out from under once they’ve accomplished what they’ve needed to.

    OTOH, I don’t read anything from Stoller without a canister of morton salt in hand.

    • Minkoff Minx says:

      Oh yes, great post and discussion indeed.

      My Peggy, you really hit a nerve with me by writing this post. It is as if you know what hell those of us who have been through the modification scam have been through. You have spoken for me completely. You have put into words how skeptical and doubtful I am of any of these relief programs, review committees, etc. I have nothing to add but my admiration for you as a writer and a person. Thank you.

      • peggysue22 says:

        Thanks for that, minx. I’m really sorry for what you and your family went through. It’s unjust and was totally avoidable. It was outrageous what these financial institutions did to individuals, families and communities. They caused untold suffering to line their own pockets and company coffers. And they should pay the price for that. Though I haven’t been through this, as American I will not be satisfied until I see perp walks–and not just lower level people.

        You and your family and all the other American families have certainly paid the price. It’s Wall Street’s turn now. It sickens me that it’s taken this long to even address the matter. I give the Occupy people credit for putting this issue on the front burner.

        I’m skeptical at this point but I’m willing to be proven wrong, even happily so. Maybe the pendulum will swing the right way and we’ll all have our day in court.

  5. quixote says:

    The rule-of-thumb ways of sorting truth from lies don’t look good on this one.

    1) You don’t put one champion of investigation and four (count ’em: four) banker-poodles on a commission as co-chairs if you’re serious about rooting out fraud. You appoint a special prosecutor and give her the necessary powers. (I say “her” because looking at that list of AGs with a conscience, women are represented out of all proportion to the total number of AGs.)

    2) If the rumors about limiting the commission’s work to robosigning fraud as a starting point are true, then the procedure is following the usual pattern of giving away 90% before even beginning work. The normal pattern is for the remaining 10% to be given up during the “investigation.”

    3) Financial stocks were up enough to take the whole SP500 with them for a while on the news. I haven’t seen them tanking as they notice actual teeth buried deep in the details. Ergo: there are no teeth.

    4) Any sign of hope I’ve seen people talk about, seems more like grasping at straws. None of them comes close to cancelling 1) above. Hence 3) above.

    Let’s face it, the only way to put a gloss of hope on this is by using the desperate desire to keep Repub clowns out of the White House. (I.e. “Hey, he’s making an effort. He’s not so bad. We can vote for him.”)

    If that’s your goal, just articulate it. “The Repubs are so bad they must be kept out of power at all costs.” Ignoring a rather clear pattern of practice is never a good idea. We had enough of that in 2008.

    • ralphb says:

      If the rumors about limiting the commission’s work to robosigning fraud as a starting point are true,

      Did you not read Matt Taibbi’s piece? The robosigning abuse was the only thing that might be in the settlement. Everything else is still on the table for investigation and prosecution.

      I realize this is going against a streak of defeatism amongst liberals, which generally keeps them from achieving anything outside a circular firing squad, but why not give it a try for a change? Conservatives have won battles because they don’t start whining until the fight is done.

      • quixote says:

        Ralph, the interesting question is why you are so consistent in your defense of this commission when

        a) there is extraordinarily little reason to think it was not set up to fail, and

        b) Obama’s past behavior has consistently been to create roach motels for any actions directed toward making banksters shoulder some of their own losses.

        Vote against Repubs if you feel that’s important. (I’ll be doing it myself via any progressive third party I can find.) But it’s time to stop trying to diminish the harm that Obama has done and continues to do. As I say, doing that did not get us to a good place in 2008, and there’s no reason to think it’ll work better this time.

      • bostonboomer says:


        I don’t think Ralph is “defending the commission.” I think he’s taking a wait-and-see approach, which I agree with. Obviously we’re all skeptical of Obama’s motives, but state AG’s may have different motivations.

        As I’ve said repeatedly here (getting no response), Masshachusetts AG Martha Coakley has been successful in several lawsuits against big banks. She’s certainly no Obot. She is the one who forced the issue with the Defense of Marriage Act, and her efforts forced Obama to change his position. He never would have done that without the pressure from MA.

        We are either going to be stuck with Obama for another four years or we are really going to go off the deep end with Romney. The only hope we have is to push Obama to do things against his will. He needs to be forced to give the commission the resources and staffing it needs. I don’t see the value in just throwing up our hands and giving up before we even apply pressure.

        • dakinikat says:

          At this point, I’m hoping all the Republicans get soundly trounced just so it will force them to clean house. Our country can’t afford a party whose ideas come from the 19th century and iron age mythology.

      • bostonboomer says:

        Obviously, I’m open to alternatives strategies. Are there any?

      • ralphb says:

        BB summed up my attitude much better than I could have done. I don’t believe in preemptive surrender. That’s been the problem with the administration but he may be forced by electoral realities to change course.

        I’m also open to other strategies but no one seems to have one.

  6. I apologize for going OT, but I was cruising the web and found this disturbing story on Mother Jones: http://motherjones.com/mojo/2012/01/gabby-giffords-missouri-cross-hair-stickers-democrats Have any of you heard about this? Seriously, if we don’t have man parts I guess we need to go home & procreate or get ourselves to a nunnery!

  7. jaymagoo says:

    We had all hoped Obama would be a president who would respond to the idealism of progressive Democrats, but we soon learned that his mushy, wishy-washy responses to demands that he show some integrity were the rule, not the exception. So now he has an election coming up, and he can’t run again. Will he show some of that mysterious quality we all attributed to him back in 08 but didn’t see? He’s collected a respectable war chest for the election so he doesn’t need to pander to the big money guys any more. I never thought I’d be talking this way about Obama, but those are the facts we’ve learned to accept.

    • dakinikat says:

      Given his record in Illinois and the US Senate, I never expected much from him at all. However, he’s even been worse than I anticipated. Still, given the Republican field and all that nuttiness, he’s definitely the fruit of the less poisonous tree.