Shahien Nasiripour continues his dogged financial reporting, this time at the Financial Times, on a story that seems superfluous at this point: the 50-state AG investigation of foreclosure fraud.
Perhaps an interesting story could be made out of what Tom Miller plans as a face-saving measure after the broad settlement fails. But the settlement itself is dead.
This is the seventh month in which reports have said that a deal is right around the corner. Nobody really wants to sign onto a deal, however: the banks don’t want to give up the money, and increasing numbers of AGs don’t want to give up the liability release.
In Shahien’s story, it’s telling that all the players are doing the arithmetic on what each bank would owe (with the alarming information that 80% of the funds would go to the federal government to parcel out, and only 20% to the states who are negotiating the deal). That sidesteps the fact that many AGs want to limit a liability release while the banks want to broaden it. In addition, New York AG Eric Schneiderman and his allies want an actual investigation on the depth of the problem before administering a settlement. So there’s no needle to thread.
The latest AG to stand with Schneiderman and against the attempts to whitewash the fraud of the big banks is Kentucky AG Jack Conway. He is up for re-election this year, and is known nationally by virtue of his unsuccessful challenge to Rand Paul for Senate in 2010. Conway, in conjunction with the Progressive Change Campaign Committee, sent an email to supporters aligning himself with Schneiderman.
The same Wall Street banks whose irresponsible actions led to our nation’s economic collapse are now pressuring all 50 states to give them legal immunity. The banks want to block any criminal or civil accountability for actions that have yet to be investigated.
Attorneys General from Delaware, Minnesota, Nevada and New York have been fighting back. Today, I want to make a clear statement in support of Wall Street accountability and against immunity for banks — and I ask you to join me on this statement:
“Today’s economic crisis was caused by Wall Street acting improperly. Every American has paid the price — with families losing their homes, investors losing their money, and many Americans losing their jobs. There should be absolutely no criminal or civil immunity given to banks for activity that has not yet been investigated.”
Several things are important here. Kentucky didn’t really have a big housing bubble – Conway is supporting this on principle, rather than in service to a wide swath of dispossessed and struggling borrowers who are victims of fraud. Second, he writes this in the context of an election which has tightened up minimally. So he obviously finds this to be a winning issue on the campaign trail. Third, it would be tempting to just ignore a proposed settlement that isn’t going to happen. Conway sees political advantage in stamping on this process, which is already flailing.
The PCCC put this out with a petition, getting supporters to sign on to Conway’s vision that there should be no liability release without an investigation. Conway becomes at least the sixth AG – joining Schneiderman (NY), Beau Biden (DE), Martha Coakley (MA), Catherine Cortez Masto (NV) and Lori Swanson (MN) – in objecting to a settlement without proper investigation.
Kamala Harris, the California AG, is not on that list, and in the one bit of news in Shahien’s report, he writes that the state is meeting separately with the banks:
Separately, lawyers for California’s attorney-general are meeting the large banks, people familiar with the matter said. California officials declined to comment [...]
Kamala Harris, California’s attorney-general, has called for large debt relief for strapped homeowners. About 2m California homeowners owe more on their house than it’s worth, according to information provider CoreLogic.
Ms Harris had considered joining New York and Delaware in their investigation into Wall Street’s role in packaging mortgages into faulty securities. Such a probe would delay any settlement.
Should some banks reach an accord with California, it would likely provide a reference point for nervous bank investors. The state houses one of every seven US homeowners with a mortgage.
The fact that Harris flirted with joining the fraud investigation of Biden and Schneiderman, and then went off to cut her on deal, reflects very unfavorably on her.
More on the Conway announcement from the Huffington Post.




17 Comments

Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About FDL News Desk
Possibly valuable history lesson from author David Graeber, interviewed by Amy Goodman on Monday:
Related news from Dallas:
BofA Suit May Be ‘New Front’ in Lawsuits: Lawyer
“Bank of America Corp. (BAC) is among a group of lenders that may face a wave of new lawsuits claiming the system they’ve used for more than a decade to register mortgages cheated cash-strapped counties out of millions of dollars.
“Dallas County District Attorney Craig Watkins said state attorneys general and county officials across the U.S. have expressed interest in his lawsuit against Mortgage Electronic Registration Systems Inc. and Bank of America, filed in Texas state court on Sept. 21. Dallas County could be owed as much as $100 million in filing fees, he said.”
Meanwhile, US stock averages are about to end the day down by seriously large numbers:
Just before 3:30 pm, Bloomberg’s stock tickers showed the following:
Stocks
Americas
INDEX……………..VALUE………CHANGE……..% CHANGE……TIME
DOW JONES INDUS. AVG..10,609.00…..-515.82………-4.64%……15:26
S&P 500 INDEX……….1,115.38……-51.38………-4.40%……15:25
NASDAQ COMPOSITE…….2,421.68…..-116.51………-4.59%……15:26
Big bank stocks are getting killed:
-5.799%
PRICE: 6.010 USD
Bank of America Corp (BAC:US)
-5.947%
PRICE: 92.040 USD
Goldman Sachs Group Inc/The (GS:US)
-8.227%
PRICE: 23.420 USD
Citigroup Inc (C:US)
-5.043%
PRICE: 28.810 USD
JPMorgan Chase & Co (JPM:US)
-8.738%
PRICE: 2.820 USD
Credit Agricole SA (CRARY:US) (gigantic French bank)
-8.277%
PRICE: 4.100 USD
Societe Generale SA (SCGLY:US) (gigantic French bank)
(All quotes from Bloomberg ticker here (using JPM quote as example).
Mr. Dayen, yer first two paragraphs I sorta understood.
Yer 4th and KILLER paragraph is way beyond my comprehension level.
But I thank ya for all your efforts to bring all you do to us readers.
Damn this shit is complicated beyond my econ abilithy.
I guess, I CAN still flip a finger n fuck you at The Wall n dem bankers N Investors, tho.
Out of basic anger against them, n all that.
Yeah, my IRA is shit again, too.
What’s new?
;-)
It will only get worse . . . .
A man in Georgia was put to death last night for a crime he most likely didn’t commit.
Yet Wall Street thieves destroyed millions of lives and received a bailout and never went to jail. I don’t know which expletive to scream.
“…the state houses one out of every seven homeowners with a mortgage…”
well, that comment reveals the plot line -
a) kamala harris has been bought off by the banks (who hope to use ca as the wedge in negotiating a deal – “so many suffering…”)
b) kamala harris believes that talking about “getting relief/money to homeowners quickly” will allow her to disguise the fact that she has been bought off by the banks/mortgage speculators.
“in service to a wide swath of dispossessed and struggling borrowers who are victims of fraud”
DDay-
I am missing the point obviously.
The banks want Federal and State immunity with respect to lawsuits surrounding their securitization and were willing to come up with $50 billion to get it, along with a reduction in principle program.
The hedge funds screamed and the securitization immunity off is gone.
The U.S. and state officials countered with a narrower offer that would cover robo-signing and other servicer-related conduct but leave banks open to potential legal action for wrongdoing in fair lending and securitization. Only Bank of America agreed and was willing to pay $8 billion and have a principle reduction program.
The hedge funds screamed and got various AG’s to reject the limited deal – a deal that was already, in effect, rejected by the banks (except for BofA). These AG’s are now somehow heros? Could you explain the reasoning that makes them heros?
Is it the push back on all Federal attempts to come up with some immunity for something that will generate a side agreement to do principal reduction? Because that is the Eric Schneiderman position. Eric Schneiderman wants years of PR as he “investigates and prosecutes wrongdoing in a variety of areas, including the bundling of loans in mortgage securities”. He is not fighting for homeowners.
There will be no agreement – you can stop worrying – there will also be no housing market or bank recovery or economic recovery for a decade.
If you were a bank would you dream of agreeing to anything that left out securitization – the reason you came to the table?
The AG’s are in the pocket of the hedge funds as they sell us their populist intent.
Thank God Eric Schneiderman’s investigation will not be rendered moot and toothless before it had even been concluded, right?
“in service to a wide swath of dispossessed and struggling borrowers who are victims of fraud” – yeah, right – only not one dime will go to the folks that purchased the homes and are in trouble now.
I think you point in the correct direction, but miss an important point.
This is money vs money. The hedge funds want to buy the assets (the houses) at a wholesale price way below market and rent or sell these assets (with very profitable loans) back to the public.
In addition the hedge funds see the way clear for them to own the banking sector, by taking it through receivership and buying the banks from the receivers (FDIC) or become debtors-in-possession in bankruptcy.
This is predatory capitalism. Noting in this scenario benefits the general public, nor is it intended to benefit the general public.
The hedge funds as the new owner of the mortgages will not cease the relentless seizure of homes at low prices, and will use their ownership of the foreclose homes as rent seeking, either through rentals or purchase loans on the homes.
Follow the money?
just for information,
following on this quote:
“…there should be no liability release without an investigation. Conway becomes at least the sixth AG – joining Schneiderman (NY), Beau Biden (DE), Martha Coakley (MA), Catherine Cortez Masto (NV) and Lori Swanson (MN) – in objecting to a settlement without proper investigation…”
is it your opinion that the named AG’s have been bought off by some hedge funds?
i rather thought they were quintessential dems.
Sign on to support Conway here:
http://act.boldprogressives.org/sign/petition_conway/?akid=5241.826306.metr-A&rd=1&source=e1-conway-petition-3mo-nonty&t=3
This is what Obama should have said [and believed] from Day One of his term. Could have properly directed anger and blame towards Wall Street and the banks, and cut off the formation of the Tea Party, whose rich sponsors played upon folks’ anger and vulnerability.
FWIW (and I may be wrong) but I’m guessing that Kentucky did not have the big housing bubble because I’m pretty sure that the state laws do not allow the big banks to operate unchecked. I think it forces them to establish a separate holding company that is only for Kentucky so that the smaller, community banks have a more level playing field.
…and Dems are immune to the charms of hedge fund managers?
I am a Democratic Party voter for 50 years – but I have seen enough Democrats sell out to the same forces that own the GOP to be unimpressed by a label – I chose to only judge actions.
The AG actions benefit no homeowner – they do benefit the hedge funds and they do benefit the AG’s by giving them the PR needed to get to the Governor’s office.
I see no reason those of us on the left that are issue oriented as opposed to being members of someone’s fan club (see O-bots) should celebrate what the AG’s are doing – especially given the rotten side effect of harming the economy and the non-rich.
i was asking for information as i clearly stated in my question.
i was not asking as an implied criticism of your comment.
we all know that there are democrats who sell out on one issue or another all the time.
the most interesting issue for me is:
are there, and who are they, any democrats that represent the well-being of the people. i look for answers to that question in lots of places, including but not limited to bank/mortgage negotiations.
the hedge fund issue is a new one for me. i have not seen that discussed elsewhere.
now that i am thinking about it, it seems odd to me that “hedge funds” would believe they could get away with buying up banks; that would be a very big pig for a serpent to swallow.
Should we thank AG Harris for thinking about joining AG Schneiderman and now AG Conway to further investigate the banks’ criminal acts, or should we suggest she buy a bus, go on a convoy with Sarah Palin and tell everyone that she hasn’t made up her mind yet. What possible reason could AG Harris have for not wanting to protect her constituents? The mere fact that she needs “time” to reach a correct decision is a clear indication to me that she has taken a payoff to keep her mouth shut. If her children or loved ones have been threatened we would all understand. However anything short of that, would be unconscionable.