Whether you believe in Eric Schneiderman’s ability to deliver a legitimate investigation on mortgage securitization fraud or not, you have to admit that the united front on opposition to a settlement on foreclosure fraud collapsed the moment that he agreed to helm that federal investigatory task force. He immediately separated “pre-bubble” and “post-bubble” conduct, allowing for a settlement on the latter while he joined the investigation on the former. And eventually, every other AG on the Democratic side fell in line, as they didn’t have New York as an anchor to stay out of a settlement.
That’s just what happened. And now we have HUD Secretary Shaun Donovan and Iowa AG Tom Miller, head of the executive committee that settled on foreclosure fraud, clowning Schneiderman on the record, saying that he got next to nothing in exchange for his holdout.
Schneiderman, by the way, PARTICIPATED in this story. The story by Glenn Thrush frames a battle between Donovan and Treasury Secretary Timothy Geithner on whether to force banks to reduce principal on loans as part of the settlement:
In fact, Donovan’s preferred approach to solving the worst housing meltdown in U.S. history — forcing banks to write down a relatively modest amount in mortgage principal to help out homeowners — won out over initial objections of Treasury Secretary Timothy Geithner, a boogeyman to many liberals who think he’s been too soft to punish the One Percent.
“Something really changed [in the White House] after ‘Occupy.’… Shaun was a lot more empowered to make a deal,” said New York Attorney General Eric Schneiderman, who wrangled with Donovan during months of negotiations between 50 state law enforcement agencies, HUD, the Justice Department and five of the nation’s largest banks.
Schneiderman — who repeatedly prodded Donovan to take a tougher line with lenders — said he noticed Donovan gaining “more leverage” over Geithner last fall, as the White House political message morphed from compromise and deficit reduction to economic equality and helping out the middle class.
Geithner, of course, took the “moral hazard” line, saying that bailing out homeowners would set a dangerous precedent. This must have never come up with respect to Citi and BofA and AIG.
But the entire frame of this is a bit lopsided. There is no guarantee that the settlement will lead to the maximum amount of $32 billion in principal reduction that Donovan hypes. In fact, the government’s own press release only guarantees “at least $10 billion” in principal reduction. Needless to say, even the high-end amount is next to nothing relative to the scale of the problem for underwater borrowers. And according to this article, Geithner was won over when he learned that the program would not be “overly punitive.” We’ve chronicled the numerous ways in which the banks make out very easy on the deal, and can even profit off it.
But the interesting part of the story concerns Donovan’s work on Schneiderman. After a New York Times article about Schneiderman coming under pressure to settle, Donovan went to work:
That did it for Donovan, according to people close to him. Worried that the settlement was in danger of falling apart, he woke up at 5 a.m. the next morning and sketched the outline of what would emerge as the final compromise plan.
A bit later he called Schneiderman, who immediately began re-arguing his case for holding banks accountable.
Donovan stopped him: “Look, hear me out, I want to get past this,” he said, and proposed creating a special panel to probe wrongdoing by banks, to be co-chaired by Schneiderman. He also promised to limit the scope of any releases granted to the banks and rewrote his draft.
Miller, who clashed with Schneiderman over the releases, said Donovan didn’t make many changes but was artful enough to sell it as a compromise to the New York attorney general, who wanted to seal the deal.
“Essentially what Shaun did was let Eric take credit for shaping the release,” Miller said, “credit that wasn’t factually correct.”
Wow. This is on the record, with Miller saying that the release only looks like it was tailored to Schneiderman’s specifications. Miller, by the way, was announced today as one of President Obama’s re-election campaign co-chairs.
Schneiderman has promised that he would walk away from the task force if he found it insufficient, with his co-chairs slow-walking the investigation. With the task force barely begun, here’s the head of the state settlement and insiders close to Donovan just out-and-out clowning him, alleging that Donovan bait-and-switched him. We’re waiting for that walk-away any time now.
UPDATE: I should add that I don’t particularly believe Miller, who has shown no problem with lying in public in the past (he’s the guy who said “We will put people in jail,” remember). It was reported back in September that securitization liability releases were in the settlement. But I think what’s important here is that Miller is saying this on the record, basically laughing in Schneiderman’s face.





51 Comments


Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About FDL News Desk
Gee , who cudda seen that comin?
As a somewhat proud Iowan(Rep steve king is not in my district),
Tom Miller and Secretary of Monsanto Villsack are nothin but Third Way sellouts.
BTW , Christy Villsack, the better of the two is running against King.
Gosh, hadda move from SE Iowa to Nw Iowa to do it.
BTW
I’m not holding my breath for schneidermann to jump ship either.*g*
As Dr. Phil says, “You choose the behavior, you choose the consequences.” The American people have chosen to put liars and thieves in charge, so their consequences are exactly what we see happening. For those of us who pay attention, think critically and question everything, we’re targeted for ridicule and punishment.
If you lie down with dogs, . . .
Fool me once . . .
When you find yourself in a hole . . .
And so forth.
No reason to hold these enemies any closer, it seems.
Beyond parody. There is no limit to their contempt for the base.
Housing Wire is claming Treasury will not allow the use of HAMP dollars by the banks in the settlement…
Treasury shields HAMP dollars away from AG settlement
Unless Schneiderman has been promised something bigger by Obama, US AG, he should walk away from this farce and, if he still can, withdraw his support of this farce settlement that hasn’t been settled.
But I have a feeling, he’s accepted a bigger bribe and signing onto this bank bailout will assure his easy confirmation. (Just speculating the Obama will get a 2nd term.)
My timer is running on how long he allows himself to be Obama’s fool.
Whoa. so now we have Obama’s Iowa campaign coordinators publicly dissing Schneiderman, who’s joining made it possible for them to sell the settlement? that’s about as politically stupid as you can get. Can we expect a phone call to Miller and a public walk back from Donovan?
I think he’s sold out, otherwise Miller would have been much more careful about what he said.
I also would laugh at Schneiderman. In Public. To his face. He got gamed by OBAMALLP!
Boxturtle (Either that or there’s a truly amazing bribe headed his way)
It’s the way the O-team have always treated their little people.
My Guess: Nope. Scheniderman has surrendered all his leverage, unless he willing to bolt.
Of course, that assumes that he hasn’t been convinced to accept the end result regardless.
Boxturtle (And that would seem a bad assumption)
The only thing the 1%ers don’t understand is that it is not about them. It is about the 0.01%ers. Everyone else gets pissed on.
What did Donovan have to gain? Why did he pull this stunt? Who is he REALLY working for?
Eric It’s easy to talk the talk of walking away, now to actually walk the walk that’s the measure of the man.
The qualifier being Diebold of course.
You acknowledge they are thieves, no ?
Expressing their utter contempt for everyone else. Like Issa’s hearing. It’s SOP for pols these days. And not just in the U.S.
Get used to it.
I don’t think those comments were planned, I think he was gloating and went a little too far.
Boxturtle (Still awaiting comment from Schneiderman)
And what is Dawn Johnson doing now…
So we are simply to digest this as “game strategy” not “sum strategy?”
It’s not a strategy at all. It’s just who they are. They have all the power & control; they don’t need anyone.
Old saying: “When you are up to your neck in alligators, sometimes it’s difficult to remember that your original goal was just to drain the swamp”.
Perhaps a 50 state audit team should be attached to the settlement since this is the largest HUD settlement in history. HUD has a poor history, like DOD, of having billions unaccounted for.
Lord Help me!
Keep me from saying anything bad about Obama today. It is just hard.
That’s kind of where I am at as well eCAHN.
The mask has been torn off the facade. They don’t even bother trying anymore.
“A sucker is born every minute.”
I’ve got to run back and refresh myself on those congress critters that sit on the Financial Oversight Committee.
Being female, it was the Issa hearings that made me realize that.
On the same day, dday had a headline about O asking for power to reorg USG. In true frog boil manner, O’s public announcement started small. But like the AUMF, will lead to the most radical changes ever.
It was one of those days I saw into the future so clearly it burned. I have been in a blue funk ever since.
I prefer ascerbic and dripping with contempt and disgust as a descriptor of myself,
but I can go with “blue funk”.
I keep remembering the first bill he signed after taking office. So wish he would have said, this is not good enough. It should be the law that females are not paid less than males for the same job. Period.
Instead, they have three months to do sleuthing and try to find out themselves and make a case.
eCAHN–
Just a note: your comments so often exactly mirror my thoughts (though you write with more eloquence and focus than I do). I consider you the lead singer in my choir. Would ask you to come and stand under my cloud, but expect you would find it as dark and dreary as your own. Keep writing–you make me feel less alone.
Was just looking at all the definitions of blue funk. Turns out it can mean anything you want it to.
Thanks.
And getting harder EVERY day.
How bout lowering corporate income taxes?
No not romny, mr. obama.
Well well well.
My mood might be getting ready to improve. A light bulb blew over the weekend & messed up the lights over my working area in the kitchen. I’m on my third call to an electrician. First didn’t call back after 2 messages, second can’t come for weeks. Third says this afternoon or tomorrow morning.
FUCK Schneiderman. He took us all for a ride. I knew Kamala Harris was a phony toady, but Schneiderman rode in on his white horse as the second coming of Eliot Spitzer.
And that’s what he’s doing before the election.
You can extrapolate from that what he’ll do to us after he’s reelected.
I know that there was the big discussion about being careful of what you say and how you say it in relation to giving some slack to the various people so newbies to FDL are not put off. I can’t do that. This was a sellout from the start as far as I am concerned. I said that it was good that the holdout ags were doing that, but let’s see over time. Well, time is here and schneiderman has to eat crow. He thought that this would give him credibility for the next office, but the dims themselves are laughing at him (I also saw this at Naked Capitalism) and miller (funny about that name) is getting an attaboy from 0. What is the good that they are doing for those that lost their homes? Maybe a check for less than $2000. I see obama as owned by the big corpses, the scotus as totally in the pocket of the big corpses, and the congress as waterboys and watergirls for the big corpses. All of the elected are either in the dim wing or the repug wing of the one party. The ngos are almost all in the veal pen. I simply can’t say anything nice.
Schneiderman
And every time there’s a seeming white knight, a whole subgroup here gets all excited about him/her and angry with those of us who express skepticism. That too is getting tiresome.
Dude…..you MUST be clairvoyant!!!!
Funny. I had a good day yesterday. New carpet cleaner came and FINALLY got the ugly stains out of my hall carpet. AND, the insurance I bought on my new previously occupied home (last August) to cover minor repairs and PAID FOR by the seller, replaced my broken garage door opener except for the $60 deductible.
And, BTW, that rash I told you about, cleared up with some hydrocortisone cream.
Now, if only Obama doesn’t doe something stupid to wreck my day……..
OH SHIT!
THAT euphoria was short-lived.
FWIW, I don’t think I’ve ever seen you say anything offensive or anything that would run anybody off.
BUt, then again, I’m not here all the time. :-)
And there was LIGHT!
I had 4 little jobs. They did 2/4. I need new fixtures for the other 2. They will buy them tonight & come back tomorrow to install them.
There’s got to be a joke in here somewhere, like how many economists does it take to screw in 8 light bulbs. (Outdoor motion sensor lights have 2 bulbs each.)
Everyone on the planet at this time is facing a choice. Which side will one serve. For me this life experience is about spiritual growth and watching the choices TPTB are making is telling. They will pay, the law of the universe will demand retribution. Those that have sacrificed their integrity have incurred great debt. Debt to all they have harmed, incalculable debt. I often wonder if the saying, “the sins of the father…” is true, and if so, look what they have done.
Nothing up on Schneiderman’s AG web page about this yet.
He formerly worked for Bloomberg — so there’s that connection to Big Money and power. Maybe he’s just playing for something bigger? And wants Wall St. and all that money, money, money on his side?
In a very public interview Donovan needs to be asked, “What was your strategy to this settlement?”
If he is using a strategy to work for the good of the citizens, he would HAVE to use a sum strategy.
If he is gaming the system for bank buddies or anyone who benefits from the bad accounting at HUD (as it appears), then he could be confronted on gaming the system as his strategy. Gaming strategy is simply wasting tax dollars. He is charged to do better than “game strategy.”
Thanks. That was very nice of you.