Last week I wrote about the smear campaign that’s revving up against New York Attorney General Eric Schneiderman. Now Schneiderman is facing intense pressure from the Obama administration to drop his objections to a bad settlement with Wall Street around the foreclosure crisis. Gretchen Morgenson reports:
In recent weeks, Shaun Donovan, the secretary of Housing and Urban Development, and high-level Justice Department officials have been waging an intensifying campaign to try to persuade the attorney general to support the settlement, said the people briefed on the talks.
Mr. Schneiderman and top prosecutors in some other states have objected to the proposed settlement with major banks, saying it would restrict their ability to investigate and prosecute wrongdoing in a variety of areas, including the bundling of loans in mortgage securities.
But Mr. Donovan and others in the administration have been contacting not only Mr. Schneiderman but his allies, including consumer groups and advocates for borrowers, seeking help to secure the attorney general’s participation in the deal, these people said. One recipient described the calls from Mr. Donovan, but asked not to be identified for fear of retaliation.
Not surprising, the large banks, which are eager to reach a settlement, have grown increasingly frustrated with Mr. Schneiderman. Bank officials recently discussed asking Mr. Donovan for help in changing the attorney general’s mind, according to a person briefed on those talks.
In an interview on Friday, Mr. Donovan defended his discussions with the attorney general, saying they were motivated by a desire to speed up help for troubled homeowners. But he said he had not spoken to bank officials or their representatives about trying to persuade Mr. Schneiderman to get on board with the deal. [Emphasis added]
The amount of stomach-turning, nausea-inducing crap in this one passage is hard to handle. The Obama administration – through HUD and the DoJ – is pressuring New York’s top law enforcement official to stop doing his job. The banking industry asked the Obama administration for this pressure and the Obama administration has complied. Not only is the administration pressuring Schnedierman’s office, they’re pressuring consumer groups to pressure Schneiderman’s office on behalf of the bankers. And then Donovan is justifying it with the transparently false line that it’s, in fact, about “a desire to speed up help for troubled homeowners.”
The current figure being bandied about in the 50 state attorney general settlement talks with the banks is in the range of $20-25 billion. If Donovan and the Obama administration wanted to “speed up help for troubled homeowners” they could instantly unleash the approximately $40 billion the Federal government has sitting unused from the HAMP program and the Hardest Hit Fund. But they don’t want to speed help to troubled homeowners, as Atrios points out, because they’ve had years to do this and still haven’t done it.
The only rival to Donovan in terms of hair-pulling absurdity is Katheryn Wylde of the NY Federal Reserve board and Partnership for
Charlotte 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.”
Actually, Ms. Wylde, no, they’re not. Wall Street is Wall Street. Main Street is Main Street. And corporations are not people. Sadly it’s hard to imagine Shaun Donovan or anyone else driving this in the Obama administration disagreeing with Wylde.
Not shockingly, I’m not the online one writing online who’s furious about this reporting on the administration’s efforts to squash investigations into foreclosure fraud.
Yet rather than address real, serious problems, senior administration officials are instead devoting time and effort to orchestrating a faux grass roots campaign to con a state AG into thinking his supporters are deserting him because he has dared challenge the supremacy of the banks.
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.
Did you see what [Donovan] tried to do right there? It’s called lying. It’s complete and utter bullshit. The Obama administration’s desire for Schneiderman to, well, stop doing his job, isn’t to further the interests of distressed homeowners at all. It’s all about giving the banksters yet another “get out of jail free” card.
Eric Schneiderman was elected to do a job, an extremely important one, serving the public’s interest and he’s doing a mighty fine job of it so far. If anything, the enemies he’s making, as illustrated above, show just how well he’s performing in that position. At a time when our US Attorney General, the AGs of states around the country as well as the federal agencies like the SEC and other instituions that are supposed to be representing the public’s interest seem to be AWOL or simply indifferent to those interests, Schneiderman is one of the few public officials anywhere that seems to actually want to do anything to hold anyone, anyone at all, accountable.
I can’t really recall a single piece of news that made me as hopping mad as this piece by Morgenson did. It’s not that this was really news. I knew that the Obama administration and Wall Street banks would try to pressure Schneiderman and other AGs to not investigate foreclosure fraud. But the fact that the administration and its surrogates are so openly admitting that they don’t want their to be investigation is just stunning. It’s probably better, as David Dayen points out, that this is out in the open. It helps draw the battle lines with greater clarity.
On one side Eric Schneiderman and other AGs like Beau Biden, Catherine Mastos, and a few others are fighting for homeowners and the American public. On the other side, Shaun Donovan, Katheryn Wylde, and other Obama administration figures are fighting on behalf of huge Wall Street banks. Now that that’s clear, I suggest you do what Yves Smith and Phil Anderson suggested and thank Eric Schneiderman for his leadership:
If you are a New York resident, I hope you’ll call (800 771-7755 or 212 416-8000) or e-mail Schneiderman and thank him for standing up to the corruption of the banks and their enablers in the Administration. I think he will appreciate the show of support.