2 Funny Things about Obama Administration’s Effort to Pressure Eric Schneiderman
The NYT has an article about efforts to strong-arm Attorney General Schneiderman to get him to put rule of law aside for yet another bank bailout.
First, it quotes HUD Secretary Shaun Donovan as saying,
The disagreement is around whether we should wait to settle and resolve the issues around the servicing practices for him — and potentially other A.G.’s and other federal agencies — to complete investigations on the securitization side. He might argue that he has more leverage that way, but our view is we have the immediate opportunity to help a huge number of borrowers to stay in their homes, to help their neighborhoods and the housing market. [my emphasis]
And it quotes DOJ spokeswoman Alisa Finelli saying,
The Justice Department, along with our federal agency partners and state attorneys general, are committed to achieving a resolution that will hold servicers accountable for the harm they have done consumers and bring billions of dollars of relief to struggling homeowners — and bring relief swiftly because homeowners continue to suffer more each day that these issues are not resolved. [my emphasis]
You see, the Administration has an “immediate opportunity to help a huge number of borrowers stay in their homes,” without any action from Eric Schneiderman. They have a way to do so more swiftly, in such a way the servicers actually would be held accountable. It would involve offering refis with principal reductions to all the underwater homeowners whose loans are owned by Fannie and Freddie. That would not only help a huge number of borrowers stay in their home, but it would be massive stimulus.
But instead they’re sending Donovan to pressure Schneiderman to pursue a measure that would benefit far fewer homeowners and probably take more time, while putting the last nail in the coffin of the rule of law in this country.
And then there’s Kathryn Wylde, who spins her shilling for Bank of America as an effort to protect NYC’s “Main Street.”
The lawsuit angered Bank of New York Mellon, and as Mr. Schneiderman was leaving the memorial service last week for Hugh Carey, the former New York governor who died Aug. 7, an attendee said Mr. Schneiderman became embroiled in a contentious conversation with Kathryn S. Wylde, a member of the board of the Federal Reserve Bank of New York who represents the public. Ms. Wylde, who has criticized Mr. Schneiderman for bringing the lawsuit, is also chief executive of the Partnership for New York City.
Characterizing her conversation with Mr. Schneiderman that day as “not unpleasant,” Ms. Wylde said in an interview on Thursday that she had told the attorney general “it is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street — love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.”
Now why would Wylde believe she’s a more appropriate person to decide what is “defensible” than NY’s top state law enforcement official?
And while Wylde is directly doing the bidding of BNYM, ultimately this is about saving Bank of America from admitting that it is insolvent.
You know … Bank of America.
One of just a few of the big banks that is not headquartered in NYC?
One that considered–and then decided against–moving its HQ and related jobs to NYC a few years ago?
Why is Kathryn Wylde fighting so hard to get an elected NY official to put his constituents’ interests behind the interests of a Charlotte company? Why is the CEO of the Partnership for New York City working so hard to benefit a company that doesn’t even want to move to her city?
But then this effort to further erode rule of law isn’t about constituencies–about actual people rather than Mitt’s corporate people–is it?
Update: Nail, coffin, fixed. per Fractal.
Well, I’m glad somebody had the good sense to put up a post on this, cause that other moron blogger was just barking at the moon on teh Twitter. He ain’t real bright you know.
Right. But then the Administration has always had several modalities for doing this and has consistently and relentlessly refused to so use them effectively and optimally. And they sure as hell cannot fathom Schneiderman actually doing some good either I guess.
What a country.
graf 5 just before segue to Kathryn Wylde’s antics, line should end “while putting the last NAIL IN THE coffin OF the rule of law in this country.”
@Fractal: LOL! Thanks.
That’s a pretty bad error.
Wylde is such a blatant stooge for the oligarchs it can be a little breath-taking. The Googles shows she serves on the board of a pretend-“independent” education research institute at NYU which is funded by Bill & Melinda Gates and other public-school privatization oligarchs. Who was one of the midwives for the creation of the institute? Why, none other than Joel Klein, then (2008) the Chancellor of NYC’s public schools, now chief consigliere for Murdoch Inc. Indeed, the UK Guardian has caught Klein attending various soiree’s at the UK PM’s estate with the Murdochs and Rebekah Brooks along with UK’s current minister of education.
Tools of the oligarchs, all of them. In Wylde’s case, I can’t tie her directly to Murdoch’s criminal syndicate. Yet. But the Times piece is quite extraordinary in pulling back the curtain on her naked corruption. Thank you for keeping watch on these criminals, EW.
Thanks for posting about this. I voted for Schneiderman for exaltedly this reason. I hope he stands up to this. The other problem he may have is Cuomo and whether he’ll support his AG or Obama.
One other point, you should ignore the twitterings of the Obama loyalists. They are twisting in the wind with some of the most outrageous accusations and mindless argument to bash anyone critical of Obama.
@emptywheel: not so bad, really. I’m sure there are already plenty of coffins in the American rule of law, and plenty more to come. *g*
@Fractal: You got that right. Jeebus.
Thanks for another report on this issue. More light is shined on the slimey underside of these deals. I hope your post strengthens Schneiderman’s resolve. If they succeed in scaring him off, will the rest of the AGs cave?
Bob in AZ
Well, if Schneiderman cannot stave off the pressure, hard to see the others doing so.
Great questions all, emptywheel, and thank you for those. A minor thing– you might want to check the linky for “Update: Nail, coffin, fixed.”
“Kathryn S. Wylde, a member of the board of the Federal Reserve Bank of New York who represents the public.”
That would be a Class B director, just like Jeffrey Immelt, until he resigned. Is this a great country or what?
(Page 2 of 2)
Representatives for the four big banks declined to comment. Mr. Schneiderman has also come under criticism for objecting to a settlement proposed by Bank of New York Mellon and Bank of America that would cover 530 mortgage-backed securities containing Countrywide Financial loans that investors say were mischaracterized when they were sold.
The deal would require Bank of America to pay $8.5 billion to investors holding the securities; the unpaid principal amount of the mortgages remaining in the pools totals $174 billion. Lawyers representing 22 institutional investors, including the Federal Reserve Bank of New York, BlackRock and Pimco, contended that the deal was favorable.
This month, Mr. Schneiderman sued to block that deal, which had been negotiated by Bank of New York Mellon as trustee for the holders of the securities. The lawsuit contends that the deal could “compromise investors’ claims in exchange for a payment representing a fraction of the losses” experienced by investors and that it had been negotiated without the knowledge of all of the holders of the securities.
(Excerpt from linmked NYT article)
NOTE: Wasn’t Geithner with the New York Fed before being anointed for his present position?
Additionally, anyone else remember Ken Lewis of BoA being strongarmed by Hank Paulson to “take on” Merril Lynch? And if memory serves me correctly, BoA absorbed much of Countrywide’s mortgage mess.
It would be well ,imho, to consider the list of persons who have sat on the boards of Fannie and Freddie,for example Rahm Emmanuel and Louis Freeh. Investigation by Schneiderman could prove to be beyond embarrassing…
Here’s a blast from the past with some excellent “refresher” points worth revisiting:
SEC Inspector General: Yes, BoA Got Special Treatment | Emptywheel
Dec 1, 2010 – Paulson threatened to oust Bank of America CEO if he pulled out of … threatened to oust Bank of America Chief Executive Ken Lewis if the … …
Didn’t Poppa Bush administration send many banksters to jail during the S & L meltdown -Keating I remember for sure went to jail .
When will we see any of these current perps be put before a court ?
@mzchief: Hmm, guess I can’t link internally like that.
@TheMomCat: In NYS, the AG is an elected office. The Governor does not appoint – and cannot remove – the AG.
@bmaz: More likely we’ll be treated to some faux-scandal regarding the AG.
@KWillow: Actually, the NYDaily News ran a lame story about how Schneiderman was legally using his own campaign donations. Clearly, the story was dumped to try making him look guilty of something. But it came off as smart enough to know how to legally do something that helps him prosecute fraudclosure and Wall Street crimes.
My, it’s good to see this story all over the ‘net this morning!
Speaking of BoA, it looks like they’re off the WikiLeaks hook…
If everyone would remember one thing before they listend to banktalk and their prescribed mouthpieces;
There is a chance that 4% of the existing loans are valid. These would be limited to those loans where the bank actually lent their own money to the homeowner. Since this is unlikely in the extreme, let’s split it and say 2%.
Now, who has an interest in making this big problem go away? If anyone believes they have a valid mortgage, see an attorney. You have gone past the need for a shrink, because you are gullible and feeble.
Really folks, isn’t it time to cease paying someone just because they say they own your property? Have they offered any proof? Didn’t think so. How many people got an answer back from the SEIU “note” request? Didn’t think so. How many of you have had a loan mod where your attorney couldn’t protect you?
Has your wall street government ever told you the truth?
This just in: NYT editorial on *Homeowners Need Help*
Bob in AZ
@Gitcheegumee: B of A bought out Countrywide knowing of the problems there, or the hotshot financial geniuses that run it failed to do their fiduciary duty. Neither should get B of A off the hook. But I also recall Paulson adding the other transaction as the price (I would guess) for TARP.
The key problems with the so-called settlement weren’t just who gets covered, it includes who was left out, including some fairly progressive investment groups (i.e. CalPIRG and CalPERS) hobbling their potential for the upcoming 2012 free-for-all. If this stands, there’s a good chance the out-crowd gets bupkis.
And, let’s not forget how the financial genius whined for their bonuses during and after bailouts (if they’ve stopped, see Taibbi in Rolling Stone for evidence we are still tossing these goons money under the table). They need to go down, all of them.
@prostratedragon: Amen to that! So far today I’ve had the pleasure of letting Mr. Donovan know how much I appreciate his stewardship on my behalf (NOT) (email: [email protected]) and then emailed a copy of that to Schneiderman’s office, followed by a phone call of support to S’s office, and spoke to a nice no-nonsense woman who emphatically agreed what a drag it was that Obama’s administration seems so feckless regarding the rule of law. That’s the most productive I’ve felt in days. (I’m especially proud of the paragraph in my note to Donovan that started, “Listen, buster, I didn’t vote for YOU, but I did vote for Mr. Schneiderman, so hands off.”
@dugsdale: And close-parens after the final quote. (pffhhht!)
Sister Mary Elephant’s ruler is coming for you…. RUN AWAAAAAY
This is always the most interesting, informed and scary blog to read, and has been for years. Thanks again EW and Bmaz.
“Kathryn S. Wylde, a member of the board of the Federal Reserve Bank of New York who represents the public.” Hmmm. I seem to remember that those “public” representatives are selected and appointed by the banks, too.
This is BP and the aftermath of the Deepwater Horizon blowout all over again.
@alinaustex: Yes, see how much more of a corporate plutarchy we have become just since 1988.