Persistent criticism of the sluggish securitization fraud task force formed early this year to investigate Wall Street has led to more PR. Now one of the co-chairs of the Residential Mortgage Backed Securities (RMBS) working group, New York Attorney General Eric Schneiderman, has decided to act like he needs more help, after months of official statements that the investigation was proceeding at an acceptable pace.
A law-enforcement group formed to go after wrongdoing related to the financial crisis needs more investigators in order to rev up its work, New York’s attorney general said.
More than 100 people now work for the Residential Mortgage-Backed Securities Working Group, a coalition of U.S. and state regulators and prosecutors announced by President Barack Obama in January. President Obama said the group would “turn the page on an era of recklessness” by bringing lawbreakers to justice.
New York Attorney General Eric Schneiderman, one of the five officials in charge of the group, said it is making impressive progress but could accelerate those efforts with more investigators.
“Do I want more resources, want things to go faster? Yes,” he said in an interview. “Am I asking for more? Yes. Do I believe we’ll get that? Yes.” A spokesman for the attorney general declined to specify how many extra people are needed.
Earlier this week we learned of the doubling of investigators, from 50 to 100. However, given that Robert Khuzami has admitted before Congress that there is no real staff or investigative work specific to the task force, but that the various groups involved in the task force are doing their own investigations with their own resources, the numbers may just be a function of counting as many people tangentially related to the investigations as possible. So a state employee who sent a document dump to some other department is now an “investigator,” or something.
Anecdotally, I’ve heard about the same experts who tried to funnel information to the authorities about financial fraud for years hearing back from staffers associated with RMBS working group members, which has done little but cause frustration among these experts. The working group has put up a website soliciting information from “RMBS insiders,” seeking whistleblower information on fraudulent activities. This comes four months after the announcement of the working group.
In addition, there is now a coordination team in place for the working group, led by career prosecutor and assistant US Attorney for the Eastern District of California, Matthew Stegman. There’s office space in Washington, but unless Stegman is being lent to the working group for a few months, you have someone out in Riverside supposed to coordinate efforts at investigating financial fraud in New York, with most of the working group co-chairs, and the rest of his team, in DC. I suppose they could have found a coordinator in Guam that would make it more inconvenient, but this is pretty close.
So far, existing resources fund the working group’s activities, as the $55 million appropriations request to increase financial fraud spending at the Justice Department was denied.
This is also interesting, and keep in mind that this is in a report trying to defend the working group:
According to the official, the group already has issued 26 subpoenas and collected millions of pages of documents. All of those subpoenas are civil, not criminal. The recipients of the subpoenas aren’t clear, but the group is expected to file its first civil lawsuits later this year, a person familiar with the situation said.
While many securities laws impose a five-year statute of limitations on law-enforcement action, the joint federal-state effort is likely to lean on laws with longer time frames, such as the federal Financial Institutions Reform, Recovery and Enforcement Act. Passed in 1989 in response to the savings-and-loan crisis earlier that decade, the law has a 10-year statute of limitations.
The group also has secured “tolling agreements” with some financial firms, according to a person familiar with the situation. Such agreements allow legal actions to be launched after a statute of limitations technically has expired. Firms sometimes favor the move because it gives them more time to try to negotiate a settlement.
Everything about this screams settlement. The tolling agreements are secured with that in mind; it’s not like financial firms say “OK, you can keep investigating me on expired charges” if they don’t get something out of it. And every subpoena filed so far is civil. The state AGs and federal regulators made a big show of saying that they reserved the right in the foreclosure fraud settlement to pursue criminal charges. Let’s just say there’s been little pursuit there. In the interview, every goal that Schneiderman listed – “meaningful relief,” “get the facts out in the open,” – have civil actions in mind.
Ultimately, I believe the SEC will file the same kinds of actions they’ve been filing, on material misrepresentations to investors. And they will get settlements with the same “neither admit nor deny” treatment. The only difference will be that they will be part of this working group, and used as proof that the working group has teeth. And eventually, the whole thing will just fade away.
UPDATE: Incidentally, there’s supposed to be a two-day meeting of the working group next week at SEC headquarters. I’m sure our bank accountability groups, the ones that bring hundreds of people to the corridors of power to protest, know about this.




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I’m sorry, but surely that’s a typo – did you mean 260, 2600, or 26000?
After all, Tom Miller promised that “We will put people in jail.”
Oh, never mind.
Another unfunded group? Great. Civil rather than criminal actions? That’ll eat up 10 years in the courts, assuming anyone bothers to follow through. Yup, a lot of PR, but still no real help for homeowners after 4 years.
Scenario: The members of the RMBS task-force wander aimlessly around their offices mumbling, “BullshitBullshitBullshit.”
Does anyone ever wonder how many GWB left-over employees remain at DOJ (you know, those superlative Liberty University grads) whose long-term directive was to block and obfuscate until GWB’s legacy can be re-written, and all wrongdoing passes the “sell-by” date?
Does anyone ever wonder why Obama chose the advisors, economic team, chief of staff, AG, Sec. of State, Sec. of the Interior, etc. that he did? Does anyone wonder why he didn’t bother to purge the “W” obstructionists from the system? Does anyone wonder why Obama does the bidding of Wall Street, Big Oil, Big Pharma, the MIC, etc.? It’s because he embraces the Bush legacy and has been co-opted into the Bush crime family.
Those were rhetorical questions, right????
Just didn’t want you think we were ignoring you. :-)
Thanks for the attention. It’s just that I can’t tolerate the willful ignorance displayed by the comment to which I responded. Tired of the blame for Bush the Lesser when we’re 3+ years into Obama’s term as “the most powerful man in the world”. Next we’ll have someone excusing Clinton for the legislation that allowed the real estate bubble and claiming that Bush did it. When partisanship rears its ugly head it’s necessary to combat it with reality.
I think your contributions are always well though out and pertinent.
I do think Clinton, although shoudering some of the blame, did a pretty good job overall. I’ll leave it at that. I got no grudge against Bush Sr. It’s Reagan and the Cheney/Bush administrations who, while the democrats sat and fiddled, put us where we are. And, as you know, I very disappointed in Obama. He reminds me of that musical, “Promises, Promises”. That’s all we got.
GWB and Obama serve the same MOTU. As did Clinton and Bush Sr. The repeal of Glass Steagall was crafted by Robert Rubin… and who was Rubin coaching through the bailout in Sept 2008? And what did Bush Sr. do? He pushed the new world order… helping to usher in the EU and the loss democracy in the birthplace of democracy.
IMO, both parties have worked for the same PTB for decades. Right now, it just happens to be coming to a head as we experience the shift of western middle class wealth to:
1)eastern middle class; and
2)PTB everywhere.
And as usual DDay, great reporting and insight. Though after a few years of this, reading their minds is almost too easy.
I guess Schneiderman wasn’t given a Washington tutorial before accepting his new position.
He should have spoken with Arianna Huffington. She could’ve offered her March 2009 conversation with Sen. Wyden:
“This lack of transparency — and the lack of accountability that results — is one of the most significant threats to our democracy,” Wyden told me. “This is not at all how the civics books tell us the system is suppose to work. What we have here is a prime example of Washington deny, defer, delay.”
I really LOVE this quote from HuffPo:
I almost feel bad for how bad Schneiderman got snookered by ObamaHolder.
DDay… I notice that Schneiderman is talking on a Friday. Gotta wonder… was that part of the continuing deal with Obama?
You must have forgotten about that great job creating legislation that Clinton championed. It’s acronym was NAFTA and it spurred job growth everywhere but the USA.
He only got “snookered” because he wanted to, or is he that stupid?
responding to b.clinton fans and apologists everywhere…from an old school democrat
& “welfare reform”
& “humanitarian war”
& “extraordinary rendition”
& ending Glass Stegal
& in rem proceedings
& the “terrorism death penalty enhancement act’ (i.e. Patriot Act Junior)
& Democratic Leadership Council
I remember performing this song at the 2006 Democratic convention http://acmeartscollective.com/acmerecords/the-singlaubs/ (at michigan & balbo in chi town) the song is called “real welfare reform”
As we all know now, welfare reform was and is a pathetically amoral assault on poor people by politicians who refuse to raise taxes on the wealthy to support all of our citizens as a matter of collective humanity
- the result, now in this greater depression, was as predictable as it is indicative of the pro-oligarchic attitude that characterizes today’s so-called ‘Democrats’ including the current president. The limits on receiving even the paltry welfare benefits that are given to the poorest in the richest country that b.clinton’s ‘end welfare as we know it’ re-election campaign established have resulted in the most Americans using food stamps to get enough food to eat in history {FYI, that’s one of every seven American citizens- most of whom are children, how’s that for American Exceptionalism?}
: Hey dems, refusing to give benefits to poor people may make your rich benefactors happy, but it does nothing to reduce poverty in America – you bought and paid for cynical amoral asshats
‘Tax the rich to save the rest’ g.singlaub
I’ll be kind and call it “wishful thinking.”
Regardless, Schneiderman is now not only destined to be the USAG (assuming O is reelected)… he’s also demonstrated that he’s a 100% “team player.”
Gack.