Yesterday I was somewhat sour on the chances of the mortgage fraud task force that Eric Schneiderman will co-chair of succeeding in producing positive results. I think the reasons for caution remain, but David Dayen reports on a number of new facts which could make positive outcomes much more likely. In short, Dayen and his sources suggest that, first, Schneiderman’s entry into the task force was in no way dependent on his assent to a national settlement deal – he still opposes it. Second, Schneiderman’s role in the task force has been constructed to allow maximum flexibility for him to pursue what he thinks is the most fecund avenue for bank prosecutions – the fraud connected to the creation of residential mortgage backed securities (recall that it is securitization fraud which created the need to cover up such frauds through ongoing robosigning criminal behavior). Third, Dayen’s sources say if he can’t get prosecutions out of this task force, Schneiderman “walk away in the most showy, public manner possible, letting everyone know who was responsible for the lack of prosecutions.”
Other positive things worth noting include that Delaware AG Beau Biden remains committed to conducting his own prosecutions and remaining outside the settlement, while California AG Kamala Harris’s office reiterated her opposition to the current settlement as “inadequate.” While there were many positive statements from liberal groups yesterday, Color of Change and Russ Feingold’s Progressives United put out much more skeptical statements. And the New York Times published an editorial where they demanded a meaningful investigation that finally, at long last, held banks accountable for their behavior.
In short, the conditions for success may be better than they first looked, but people are going to be watching this task force closely to see if it actually produces prosecutions of banks and bank executives at a high level. This should be clear relatively quickly, given the voluminous evidence of bank fraud and other criminal behaviors. Hopefully we don’t have to wait long for this new initiative to produce results – and if they are not forthcoming, then we will know that our initial fears were realized.