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May 09, 2012

Check Off Another Securitization Fraud Task Force Promise

Posted in: Uncategorized

One of the items Eric Schneiderman has been using to push back on claims that the Residential Mortage Backed Securities (RMBS) working group is being slow-walked and made ineffectual is that they have a funding stream earmarked for it that testifies to the seriousness of effort with respect to resources. In an op-ed two weeks ago, Schneiderman wrote that “The President has requested a congressional appropriation of an additional $55 million to ensure that we have the resources to do a thorough job.”

My point on this was always that the President’s appropriation request and $6 will get you a very expensive cup of coffee at my local Intelligentsia café (seriously, $6 for a cup of coffee?). Presidential budget requests are as ignored in Washington as pledges to not accept lobbyist money, or marital vows. The request didn’t mean anything, and the House Republicans currently putting together the budget were highly unlikely to honor it.

Sure enough, yesterday, the Justice, Science and Commerce appropriations bill, the proper venue for this additional $55 million request, came up for a vote. Maxine Waters tried to include the appropriation for the RMBS working group. And it failed pretty badly.

Yesterday, Representative Maxine Waters, a member of the caucus, made the first attempt to get the RMBS group funding—and it didn’t work.

She offered an amendment to a large appropriations bill, created by Republicans, that would fund, in part, the Department of Justice. The bill provided only a fraction of the $55 million the DoJ asked for in its budget request for “investigating and prosecuting financial and mortgage fraud.” Waters proposed re-appropriating some money in the bill from the NASA program to fully fund the $55 million request.

“Considering the retirement of the space shuttle program and a shift in NASA’s priorities, I believe we should use the funds in these accounts to help bring justice to defrauded investors, homeowners, and consumers,” she said on the House floor [...]

Unfortunately, when put up for a voice vote, the Waters amendment failed in the Republican-dominated chamber. Her case wasn’t helped when Representative Chaka Fattah, also a member of the progressive caucus, spoke in opposition to the amendment, citing concerns about the loss of NASA funding.

Why was this unrealistic budget request ever allowed to be offered as evidence of the seriousness of effort? It’s theoretically possible that Senate appropriators, or the conference committee, could add the appropriation, but this all assumes that there’s going to be a budget come September 30, and not just a continuing resolution that kicks the can down the road. In other words, there’s no chance that the working group gets anything close to this kind of money for at least 4 months, and in all likelihood not at all.

It’s just another example of how the protestations about the legitimacy of the working group fall apart when subjected to the slightest scrutiny.

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