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April 18, 2012

Report: Securitization Fraud Working Group Has “No Phones, No Staff”

Posted in: Uncategorized

It started with just progressive groups challenging the RMBS working group, the task force at the Justice Department (with NY Attorney General Eric Schneiderman as a co-chair) that’s supposed to be investigating the banks on mortgage securitization fraud. The Justice Department could at least say that the critiques were confined to “websites.” But now the New York Daily News has weighed in with a much deeper critique.

Obama said, “This new unit will 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.”

Whether or not the President, attorney general and others intend to get around to this task someday, “speed” was a terrible word to choose. Because 85 days after that speech, there is no sign of any activity [...]

On March 9 — 45 days after the speech and 30 days after the announcement — we met with Schneiderman in New York City and asked him for an update. He had just returned from Washington, where he had been personally looking for office space. As of that date, he had no office, no phones, no staff and no executive director. None of the 55 staff members promised by Holder had materialized. On April 2, we bumped into Schneiderman on a train leaving Washington for New York and learned that the situation was the same.

Tuesday, calls to the Justice Department’s switchboard requesting to be connected with the working group produced the answer, “I really don’t know where to send you.” After being transferred to the attorney general’s office and asking for a phone number for the working group, the answer was, “I’m not aware of one.”

That’s almost sad. I didn’t expect much from the RMBS working group, but I at least expected the appearance of an investigation. These Daily News reporters have had a hard time finding even that. It was a pure PR play, then, without even a facade.

Remember that the Justice Department’s claim is that over 50 staffers were working right now on RMBS working group-related matters. If that’s the case, Schneiderman doesn’t know about them, at least as of April 2. And the Justice Department switchboard operator doesn’t know they exist, either.

What a complete embarrassment. The Daily News is the first media outlet to call on Schneiderman to resign from this sorry display. I doubt they’ll be the last.

Incidentally, Schneiderman’s office contacted me to note that, in response to this post, former NY AG Eliot Spitzer was similarly situated after one year in office. In January 2000, the Siena poll showed him at 26-26 on approval/disapproval, with 46% having no opinion. This March, the poll showed Schneiderman at 21 approve-23 disapprove-55 no opinion.

Somewhere down the line, Spitzer made his reputation. And he did it by going after Wall Street. Schneiderman’s reputation is now tied in with this working group, which three months after its announcement apparently has no staff or phones. So it’s Schneiderman’s decision to make.


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