On The Wrong Side Of The Rule Of Law

(11 am. – promoted by ek hornbeck)

Cross posted from The Stars Hollow Gazette

Once again the President who campaign on the restoration of the rule of law falls on the wrong side. The New York Times writer, Gretchen Morgensen, revealed in an article that the Obama Justice Department and Housing and Urban Development were putting pressure on New York State Attorney General Eric Schneiderman to drop his investigation into the banking industries foreclosure fraud that led to the economic housing crisis:

Eric T. Schneiderman, the attorney general of New York, has come under increasing pressure from the Obama administration to drop his opposition to a wide-ranging state settlement with banks over dubious foreclosure practices, according to people briefed on discussions about the deal.

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.

In other words, this is going to take too long and we have an election to finance. Please, do not piss off the banksters, they’re the only ones with money.

Obama administration doesn’t want to help the homeowners or prosecute those who committed this fraud, as David Dayen so bluntly states, they want to “white wash the fraud”:

The White House must think that if they can get Schneiderman, the AG with the most leverage over the talks by virtue of New York’s important position with respect to mortgage securitization, to bend, they can roll the rest as well. The WSJ article says that federal officials have a Labor Day target date for a settlement, and that they’ll continue “outreach” to all AGs. I bet they will.

The banks want at least 40 states signing off on this settlement before they agree to it. I can think of at least 10 AGs right now who wouldn’t agree to the broadest terms. Democrats Madigan, Schneiderman, Delaware’s Beau Biden (the VP’s son, who has joined Schneiderman on his intervention into the Bank of America settlement with investors over mortgage backed securities), Massachusetts’ Martha Coakley and Nevada’s Catherine Cortez Masto are on the record against a broad liability release in one way or another, and others like Washington’s Rob McKenna (R), Colorado’s John Suthers (R), California’s Kamala Harris, and even Utah’s Mark Shurtleff (R) and Michigan’s Bill Schuette (R) have active investigations or lawsuits on this issue. That’s an incomplete list off the top of my head. And if you add Republican anti-government types who don’t want to see any monetary penalty at all, you might not get to 25 in favor.

Of course this has earned a couple of people the dubious honor of not being named “wankers” but two of the worst people by Dayen and our man of few words, Atrios.

From Dayen the honor goes to Kathryn S. Wylde, board member of the Federal Reserve Bank of New York:

   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. The New York Fed has supported the proposed $8.5 billion settlement {…}

   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.”

And from Atrios, his honor goes to HUD Secretary Shaun Donovan for this gem:

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. … 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.

Remember HAMP? Right. They just want to help.