Greg Sargent thinks the ad above shows that conservatives have lost the argument on Wall Street. I would say that, other than the fact that Tim Geithner didn’t actually work for Goldman Sachs, and the minor sin of omission about more money flowing this year from Wall Street to Mitt Romney, it’s mostly a factual ad. In fact, they left out a lot, merely using the appearance of impropriety and the connections between the White House and Wall Street rather than the actual decisions made, which happen to largely protect Wall Street.

We’re going to get a lot of theater in the next year, with big talk about enforcement actions. In that regulatory filing by Wells Fargo, they also highlight what are known as “Wells notices,” essentially early warnings that they are about to be sued by the SEC over mortgage backed securities disclosures. Of course, every recent SEC litigation on MBS issues has ended up with a settlement where the offending company didn’t have to admit or deny wrongdoing. Furthermore, as Yves Smith points out, the statute of limitations has run out on almost all of these MBS issues. “The ONLY deals the SEC can pursue now are the last gasp transactions of March- June 2007, and on those, the clock is ticking.”

Meanwhile, the real hole in the balance sheets of the major banks, the actual ticking time bomb, concerns $308 billion in second liens – generally home equity lines of credit – that under the foreclosure fraud settlement, they don’t have to wipe out while modifying the first lien, a complete reversal of standard practice. Banks are required to write down the second liens only at equal terms with the first lien.

The banks that service about half the nation’s mortgages on behalf of investors will be able to share losses on their junior loans with bondholders and get credit toward the cash they pledged to spend in the settlement, said an Obama administration official involved in drafting the $25 billion agreement. Second liens would typically be wiped out before senior-mortgage investors take a loss, said Laurie Goodman, managing director at Amherst Securities Group LP in New York.

It’s “a gift to the banks, at investors’ expense,” said Goodman, a member of the Fixed Income Analysts Society’s Hall of Fame. “A proportionate write-down of the first and second represents a reversal of normal lien priority.” [...]

“The roadblock to getting comprehensive modifications has been the efforts of these banks, the biggest servicers, to protect their second liens,” Wilmarth said. “To only suffer losses on an equal basis as first-lien investors is a good outcome for them.”

This is a huge victory for the banks. It preserves their books. And now that they are making their highest profits since 2006, they will easily be able to put all the fraudulent conduct they committed behind them. And by the way, this treatment of second liens will ultimately make mortgages more expensive, as investors seek a premium to protect them from future outcomes like this.

As for the vaunted task force co-chaired by Eric Schneiderman, I’m quoted in this Huffington Post story about where that goes from here.

Matt Stoller, an influential blogger skeptical of the mortgage settlement, said that it’ll take the bringing of criminal charges to prove that the government is truly serious about holding the banks accountable. “They see [the settlement] as a down payment instead of what most of us think, which is that it’s actively a cover-up for a problem that hasn’t been investigated,” he said. “I want to know when the feds are going to put handcuffs on someone from [JPMorgan] for violating the Servicemember Civil Relief Act, which they admitted doing to Congress last year.”

David Dayen, another settlement skeptic who has covered the issue relentlessly for the blog FireDogLake, said the task force needs to send a message by tapping somebody with real credibility to run the operation. “In general terms, that staff director needs to be someone with a demonstrated record of seeking real accountability for these crimes,” he said, echoing a sentiment he has discussed on his blog.

For Stoller, Dayen and other critics, it’s hard to imagine that the new task force will force Wall Street to suffer the consequences of its actions when it has so far escaped prosecution. “Let’s remember, Eric Schneiderman hasn’t arrested anyone involved in this, and not for lack of authority. He subpoenaed Stephen Baum’s foreclosure mill [law firm] in April 2011, the one whose employees were caught dressing up as homeless people. There has been no [further] action on that from his office,” said Stoller.

The appointment of a staff director will be an important symbol of the seriousness of the effort. But ultimately, there are a lot of obstacles to real accountability here. And they all happen to be in that political ad up top.