Eric Schneiderman: Foreclosure Settlement “Down Payment”

Given that we’re talking about some relief for homeowners who are so far underwater that they’ve completely lost the value of the down payment they paid on their homes, I thought NY Attorney General Eric Schneiderman’s use of the phrase “down payment” to be a curious way to describe that he considers this settlement just the first step toward achieving justice.

Down payments don’t have the kind of value they used to have.

Perhaps the most interesting thing Schneiderman said other than that, though, was he thought they’d get some relief from MERS through legal means, and therefore wouldn’t need any legislation about MERS. Does that mean he thinks he can shut down MERS with his suit? Let’s hope so. That would go a long way to fix the problems in our mortgage system.

Other than that, he offered little explanation of my two main questions about this: 1) how he expects to get to the underlying problems with mortgages–the securitization problems–without using the robosigning efforts as a way to work up a chain to a real prosecution and 2) how letting banks off the hook for fraud and forgery doesn’t encourage more of the same?

In his press conference–and at more length in an interview with Greg Sargent–he said we skeptics should believe that Obama (now) takes this seriously because of assurances he gave Schneiderman and the emphasis he gave it at the SOTU.

Asked if progressives should be skeptical of the administration’s assurances, given the lack of accountability so far, Schneiderman insisted that Obama’s private and public assurances have left him convinced he is serious about a real accounting.

“He took ownership of this,” Schneiderman. “Sometimes people on the left have to take yes for an answer. The President is accepting the challenge. It’s time for progressives to say, `okay, he’s moving with us now, he’s using resources of government to aggressively pursue the malefactors of great wealth, as Teddy Roosevelt put it.’”

Perhaps most interestingly, Schneiderman said that the coalition of liberal, progressive and labor organizations that had come together to insist that the current settlement not let the banks off the hook would help force the task force to ultimately succeed.

“This will ultimately depend on the coalition that’s assembled around these principles,” Schneiderman said. “We’ve now got a progressive coalition that … can move public officials to take a more aggressive approach.”

I do have some faith Scheiderman will succeed in doing some real investigation. But when I read this description of Obama’s commitment, I couldn’t help but think of Elizabeth Warren. Sure, she got a CFPB set up. But when it came time to using a recess appointment to put her in charge of it, well, that never happened.

Also, to trust Obama on this? He’s the same guy who promised accountability on illegal wiretapping and changes to FISA Amendments Act.

I still trust Schneiderman will get some investigation here, but I’ve learned from experience that Obama may renege on his promises to progressives for accountability.

35 replies
  1. earlofhuntingdon says:

    One ought to assume that Mr. Obama’s assurances of fair treatment and full and open justice are as credible in this context as they are in the world of whistle blowers and our hidden security prisons around the world.

    Your observation about Elizabeth Warren and Mr. Obama’s well-established propensity for public bait and private switch is spot on. The list of examples is long. I would add Dawn Johnsen to it.

  2. earlofhuntingdon says:

    On your previous post about naming February 9th Bank Bailout Day, my only question is why Mr. Obama didn’t release this settlement on February 14th.

    Thanks for all your and your team’s work on this and other topics.

  3. earlofhuntingdon says:

    A fortuitous news day to announce that Bradley Manning’s trial date has been set for two weeks from today, on February 23rd (per UK Guardian).

  4. Peterr says:

    Re Elizabeth Warren, see also Dawn Johnsen, “Fierce advocate”, and Peter Diamond.

    But Marcy, as long as you’re asking Schneiderman questions, how about this: “If someone commits perjury by filing thousands of fraudulent tax forms with the state of New York, can they simply get off with paying a fast $2000/case fine — and keep the fraudulent gains from those filings?”

  5. phred says:

    Schneiderman lost all claim to receiving the benefit of the doubt by telling us to trust Obama.

    I trusted Schneiderman to kill that execrable deal, not sign on to it.

    I don’t trust him at all.

  6. prostratedragon says:

    I’m going to have to wait until this flash flood finishes roaring under the bridge to row back and check thoroughly, but I still seem to recall that robosigning, which itself is a fraud on the court, was in this case also an element in a larger fraud to make tranched mbs look like something that they are not, which basically is tax-qualified trusts. That is why so many transfers and retransfers of notes were needed even after the loans were supposedly in the mbs pools.

    That strategy almost would require, I should think, that someone in the banks signed off on it —MERS would have no reason to extend the strategy beyond avoiding recording fees on its own, though it would not surprise me if they were in a poor position to object.

    Anyway, if MERS is what it is partly in order to be a barrier around the outer circle of the banks, then I would not expect Schneiderman to get more than a few pleasing headlines many months hence, nothing that will go far enough really to start cleaning up this unspeakable mess.

    By the way, I’d forgot till I looked at WSJ’s timeline on the “foreclosure mess,” appearing today, that the $20billion figure was an early offer by the Obama administration, back in Feb of last year —$20B payable in either fines or loan modification by the banks. So on one level, this last year has been about, “Dammit I said $20billion!”

  7. prostratedragon says:

    @prostratedragon: Ah. I see from Dave Dayen that the tax fraud and other issues are part of this “pre-bubble” set of issues that need a “second table” at which to bargain.

    I think this excites Dave as much as it does me. It’s true that the primary offenses here are to state laws, New York state trusts and the like, but some of the better state positions appear to be off the table now, e.g. much of what Cortez Masto had going in NV. And there might also be some applicable federal statutes that would be easier to in voke following the factfinding of a state trial. And I seem to recall that Schneiderman’s Great Leap was supposed to be into a far more massively resourceful position than the one afforded him as the mere AG of NYS.

  8. MadDog says:

    OT – EW, and of course all other of the fine residents here, might I direct you to a comment of mine in the previous post regarding a news piece from MSNBC’s Richard Engel and Robert Windrem on the involvement of Israel and MEK in their nefarious doings in Iran.

  9. MadDog says:

    @prostratedragon: Might I suggest the possibility that Schneiderman was tempted by certain unnamed high Democratic powerbrokers on both the New York and national scene that in signing off on this “settlement”, Schneiderman would ensure their support for his future electoral ambitions?

    Such as New York City mayor? And of course, any national aspirations.

  10. MadDog says:

    @MadDog: Might I also suggest a new acronym? We all know that TBTF means To Big To Fail. Now we have TBTP – To Big To Punish.

    The message here is quite clear: Serfs, get back to hoeing those rows! We’ll tell you when you can stop.

  11. Tom Allen says:

    “There’s an old saying in Tennessee — I know it’s in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can’t get fooled again.” — George W. Bush

  12. prostratedragon says:

    @MadDog: Oh, you might, though I might reply that any such proffer was most likely a sweetener to ease the bitterness of backing down from the club that they were prepared to swing at his his, and still have available anytime he should pretend not to hear the telefon.

  13. GulfCoastPirate says:

    Are we officially an oligarchy yet or do the oligarchs still have a few loose ends to tie up before they make it official?

  14. klynn says:

    You just cannot make this stuff up. Good god this timeline gets worse by the minute.

    Obama had campaigned against the idea of Super PAC’s, but on Tuesday Obama reversed course and decided to essentially tell millionaires that he wanted them to use Priorities USA to make huge donations to help his re-election.


    Less than 48 hours after signally that Obama wanted very rich donors, like perhaps Wall Street executives, to give unlimited money to his allied Super PAC, his Department of Justice announces it reached a deal on foreclosure fraud that contains very favorable terms for the big banks.

  15. prostratedragon says:

    @klynn: I seem to recall a hair product a few years ago called Finesse. It used the slogan, “Sometimes you need a little finesse, sometimes you don’t.”

    As I recall, you “don’t” when your hair is minutes from serving as [ahem] a bridle of sorts. Which come to think of it is what someone somewhere is probably thinking.

  16. DonS says:

    I get the feeling in the last sentence (“I still trust Schneiderman will get some investigation here, but I’ve learned from experience that Obama may renege on his promises to progressives for accountability.”) Marcy is pulling her punches. I guess somewhere deep down I hope to be proven wrong too, and that there is more to come by way of actual prosecution. But, not being the host, I don’t have to be so cautious. Obama and his increasing whirlpool of slime has sold out. Not a real surprise anymore. It’s the feature.

  17. P J Evans says:

    What was he promised in return? Because I donn’t believe that the State Department is qualified even to judge whether it’s a good deal, let alone if it’s environmentally sound.

    Is it time for the pitchforks and torches yet?

  18. MadDog says:

    Well, after watching the Eric Schneiderman interview on Rachel Maddow’s show, I can conclude that he has all the attributes required for success in politics.

    Whether he has all the attributes required for success in lawyering wasn’t necessarily in evidence and remains to be seen…or not.

    I suspect that he’ll be long gone and on to better political digs before any of his purported future criminal cases against banksters arrive at the verdict stage.

  19. prostratedragon says:

    Wow, some upstart, this February 9th, and I say this as someone whose own birthday (Jan30) makes a strong bid for deletion from the calendar even despite some valiant comeback attempts.

  20. Bob Schacht says:

    I saw Schneiderman on the replay of Maddow’s interview last night. He certainly appeared convinced that, if the banksters were let off the one hook in the agreement, there were plenty of other hooks to hang them on. The proof will be in the pudding, so to speak, if and when Schneiderman and the others start nailing some hides to the shed. I sure hope Lanny Breuer is NOT on the investigation team Obama appointed with Schneiderman as co-chair.

    Bob in AZ

  21. Kathleen says:

    @Bob Schacht:

    Saw that too. Maddow was the first host of a MSM program that I heard ask “what took them so long” Schneiderman made excuses for the Obama administration. Accountability or lack of was/is going to be one of OBamas weaknesses in the next go around. Sure does not take our so called justice system to throw people in prison for sometimes decades for stealing from a local drugstore etc.

    Maddow needs to have Marcy on her program. Marcy has been writing about this lack of bankster,foreclosure fraudster accountability for years. What has taken the Obama administration so long? I know it is better late than never. But only confirms once again how there are very powerful people above the law

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