Tag: Eric Schneiderman

Cross posted from The Stars Hollow Gazette

As we have documented here at Stars Hollow, the task force that was created to pursue mortgage fraud and hold the banks accountable was, and is, a sham game to protect the banks from real relief for defrauded homeowners.

Your mortgage documents are fake!

by David Dayen, Salon

Prepare to be outraged. Newly obtained filings from this Florida woman’s lawsuit uncover a horrifying scheme

A newly unsealed lawsuit, which banks settled in 2012 for $1 billion, actually offers a different reason, providing a key answer to one of the persistent riddles of the financial crisis and its aftermath. The lawsuit states that banks resorted to fake documents because they could not legally establish true ownership of the loans when trying to foreclose.

This reality, which banks did not contest but instead settled out of court, means that tens of millions of mortgages in America still lack a legitimate chain of ownership, with implications far into the future. And if Congress, supported by the Obama Administration, goes back to the same housing finance system, with the same corrupt private entities who broke the nation’s private property system back in business packaging mortgages, then shame on all of us. [..]

Most of official Washington, including President Obama, wants to wind down mortgage giants Fannie Mae and Freddie Mac, and return to a system where private lenders create securitization trusts, packaging pools of loans and selling them to investors. Government would provide a limited guarantee to investors against catastrophic losses, but the private banks would make the securities, to generate more capital for home loans and expand homeownership.

That’s despite the evidence we now have that, the last time banks tried this, they ignored the law, failed to convey the mortgages and notes to the trusts, and ripped off investors trying to cover their tracks, to say nothing of how they violated the due process rights of homeowners and stole their homes with fake documents.

The very same banks that created this criminal enterprise and legal quagmire would be in control again. Why should we view this in any way as a sound public policy, instead of a ticking time bomb that could once again throw the private property system, a bulwark of capitalism and indeed civilization itself, into utter disarray? As Lynn Szymoniak puts it, “The President’s calling for private equity to return. Why would we return to this?”

White-collar fraud expert proves ‘mortgage-backed securities’ neither mortgage-backed nor secure

by Scott Kaufmann, The Raw Story

The forged documents were endorsed by employees of companies long bankrupt, executives who signed their name eight different ways, or “people” named “Bogus Assignee for Intervening Assignments” so that the banks could establish standing to foreclose in courts. The end result, according to white-collar fraud expert Lynn Szymoniak, is that over $1.4 trillion in mortgage-backed securities are still, to this day, based on fraudulent mortgage assignments.

The lawsuit against Wells Fargo, Bank of America, JPMorgan Chase, Citi and GMAC/Ally Bank was settled in early 2012 for $1 billion, but now that the evidence is unsealed, Szymoniak and her legal team are free to pursue the other named defendants, including HSBC, the Bank of New York Mellon, and US Bank. “I’m really glad I was part of collecting this money for the government, and I’m looking forward to going through discovery and collecting the rest of it,” Szymoniak told Salon.

Eric Holder Owes the American People an Apology

Jonathan Weil, Bloomberg News

The Justice Department made a long-overdue disclosure late Friday: Last year when U.S. Attorney General Eric Holder boasted about the successes that a high-profile task force racked up pursuing mortgage fraud, the numbers he trumpeted were grossly overstated. [..]

In an updated press release Friday, which corrected its initial release of last October, the Justice Department said a review of the cases found that the inflated figures included defendants who had been sentenced or convicted in fiscal year 2012 — not just people who had been criminally charged, as originally reported. Its original, lofty tally also included cases in which the victims weren’t distressed homeowners. [..]

What a charade. No wonder the government found it so difficult to bring a meaningful number of accounting-fraud cases against bank executives after the financial crisis. Its own books were cooked. [..]

This was the second time, mind you, that Holder’s Justice Department had pulled a stunt like this. In December 2010, Holder held a press conference to tout a supposed sweep by the president’s Financial Fraud Enforcement Task Force called “Operation Broken Trust.” (The mortgage-fraud program was part of the same task force.) As with the mortgage-fraud initiative, Broken Trust wasn’t actually a sweep. All the Justice Department did was lump together a bunch of small-fry, penny-ante fraud cases that had nothing to do with one another. Then it held a press gathering.

Between this sham that protects the banks and the egregious violations of the press and privacy of all Americans with abusive use of FISA, Eric Holder owes us more than an apology, he owes us his resignation as Attorney General.

Cross posted from The Stars Hollow Gazette

New York State Attorney General Eric Schneiderman announced that he plans to sue Wells Fargo and Bank of America over claims that they breached the terms of a multibillion-dollar settlement intended to end foreclosure abuses.

Under the terms of the settlement, banks have to abide by 304 servicing standards, like notifying homeowners of missing documents within five days of receiving a loan modification and providing borrowers with a single point of contact.

“Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure,” Mr. Schneiderman said. Since October 2012, Mr. Schneiderman’s office has documented 210 separate violations involving Wells Fargo and 129 involving Bank of America.

Shahien Nasiripour reports at Huffington Post that it’s unclear if Mr. Schneiderman can do this:

The agreement does not specify whether he can independently pursue legal action against the banks without first allowing the Office of Mortgage Settlement Oversight, run by (Joseph) Smith, to determine whether they are complying, a process that could take months.

Smith’s office will make public by June 30 its first required report on the banks’ compliance with the mortgage servicing standards. The deal dictates that the companies shall have an opportunity to correct potential violations once they are identified. If the same violations continue, the monitoring committee could launch lawsuits and levy penalties totaling as much as $5 million for each violation.

But as attorney and writer Abigail Field notes at naked capitalism, it would seem that AG Schneiderman has a case of buyer’s remorse and examines why this lawsuit is a lashing with a wet noodle:

Now that that A.G. Schneiderman’s learned that Bank of America and Wells Fargo have failed to service 339 New Yorkers according to the standards dictated by the Settlement, he’s served notice he intends to sue. Not for money; for “equitable relief.” Though I’ve not seen a filing, I imagine if he actually will seek an injunction to get Wells and BofA to start complying with (specific performance of) the four servicing standards Schneiderman is targeting in his press release: [..]

The Bottom Line

It’s really hard to see how this effort-even if A.G. Schneiderman triumphs-leads to the kind of systemic change that was possible when all of the liability for the banks’ bad acts was still on the table. You know, pre-settlement, when A.G. Schneiderman and a few other Democratic A.G.s looked like they were going to stand up for America and insist on a meaningful deal.

Consider, the most that can come of this is two of the five banks complying completely with four of the 304 Servicing Standards.

AG Schneiderman joined MSNBC”S All In host Chris Hayes for an exclusive interview about why, after a multibillion dollar settlement, banks are still not living up to rules about mortgages and refinancing.

Cross posted from The Stars Hollow Gazette

Last night President Barack Obama gave the annual State of the Union address before the nation and a joint session of Congress. He made a lofty speech outlining his plan for the nation over the next year, most of which are highly unlikely to come to fruition due to the intransigence of the Republican held House. Will any of this be remembered in a month? Or, for that matter, next year? Does anyone remember the promises and goals from last year’s SOTU? I doubt anyone remembers this:

EXCLUSIVE: Obama To Announce Mortgage Crisis Unit Chaired By New York Attorney General Schneiderman

by Sam Stein, The Huffington Post

WASHINGTON — During his State of the Union address tonight, President Obama will announce the creation of a special unit to investigate misconduct and illegalities that contributed to both the financial collapse and the mortgage crisis.

The office, part of a new Unit on Mortgage Origination and Securitization Abuses, will be chaired by Eric Schneiderman, the New York attorney general, according to a White House official.

Schneiderman is an increasingly beloved figure among progressives for his criticism of a proposed settlement between the 50 state attorneys general and the five largest banks. His presence atop this new special unit could give it immediate legitimacy among those who have criticized the president for being too hesitant in going after the banks and resolving the mortgage crisis. He will be in attendance at Tuesday night’s State of the Union address.

Ahh! Now, you remember that. Whatever happened to the Residential Mortgage-Backed Securities Working Group? Apparently not much.

Obama’s Mortgage Crisis Working Group Falls Short Of Billing

by Sam stein and Ryan Grim, The Huffington Post

A year later, progressives said they consider the panel a disappointment and, possibly, a diversion to placate Schneiderman and homeowner advocates. The Justice Department said it doesn’t know what the fuss is about.

“You described it as a unit that was announced to great fanfare,” said Tony West, the number three man in the Justice Department, in an interview. “A lot of people have the misimpression that this is some type of prosecutorial department that was set up. What the working group is is exactly that. It is part of the financial fraud enforcement task force. It doesn’t stand alone.” [..]

Schneiderman’s working group, critics said, has not lived up to that billing. [..]

According to those involved in putting together cases, officials at the SEC were naturally disposed to striking quick settlements rather than carrying out long-term investigations. The Justice Department, meanwhile, was worried about shaking a recovering housing market and fragile banks.

(Mike) Lux, in particular, pointed an accusatory finger at working group co-chairman Lanny Breuer, the assistant attorney general for the Justice Department’s Criminal Division, who has said he will leave his post next month. [..]

Whether driven by Breuer’s presence or not, the working group suffered from what the high-level source called “leaked leverage.” With different actors wanting slightly different outcomes, it closed cases that may have potentially been made bigger. Among those cited include one last month, when the Office of the Comptroller of the Currency and the Federal Reserve reached a $8.5 settlement with 10 U.S. banks on charges of foreclosure abuses.

Stein and Grim state that ‘progressives interviewed for this story who know and like Schneiderman offered the same conclusion: He got played.” Former blogger for FDL, David Dayen disagrees:

I agree with David, Mr. Schneiderman’s settlement with banks here in New York have been disappointing, to say the least. He is not some naive neophyte. He knew precisely what he was signing up for when he was offered the position with this group.

Up Date: 18:12 EST 2.13.13: From David Dayen at Salon:

Wall Street wins again

The secret truth: There never was a “task force” dedicated to ferreting out mortgage fraud

This is the key point.  There are no offices, no phones and no staff dedicated to the non-task force.  Two of the five co-chairs have left government.  What “investigators” there are from the task force are nothing more than liaisons to the independent agencies doing their own independent investigations.  In the rare event that these agencies file an actual lawsuit or enforcement action, the un-task force merely puts out a statement taking credit for it.  Take a look at this in action at the website for the Financial Fraud Enforcement Task Force, the federal umbrella group “investigating” financial fraud.  It’s little more than a press release factory, and no indictment, conviction or settlement is too small.  The site takes credit for cracking down on Ponzi schemes, insider trading, tax evasion, racketeering, violations of the Americans With Disabilities Act (!) and a host of other crimes that have precisely nothing to do with the financial crisis.  To call this a publicity stunt is an insult to publicity stunts. [..]

Maybe these groups who claim to be interested in accountability should have recognized the value of what pressured the White House to set up the diversionary tactic of a task force in the first place: public shaming.  Last month’s Frontline documentary “The Untouchables” has had arguably more of an impact on reviving moribund financial fraud cases than anything else.  Within a couple of weeks of its premiere, the head of the criminal enforcement division, Lanny Breuer, announced he would step down.  Then, DoJ suddenly decided to sue credit rating agency Standard and Poor’s over its conflict of interest in rating clearly fraudulent securities as safe assets, a case it had been investigating for two years.  You can view this as an accident of timing; it seems more like a direct response.  Shaming has done far more than a pretend task force, though that’s admittedly a low bar.  You would think outside pressure groups would have recognized the virtue of outside pressure instead of trying to play an inside game.

h/t priceman

 

Cross Posted from The Stars Hollow Gazette

There will be no perp walks, or got that matter even arrests, in the civil suit against JP Morgan Chase for flawed mortgage-backed securities issued by Bear Stearns that was filed late Sunday night by Eric Schneiderman, New York State’s Attorney General. It’s the first lawsuit filed by  Residential Mortgage-Backed Securities Working Group that was formed in January following President Barack Obama’s State of the Union address.

The complaint contends that Bear Stearns and its lending unit, EMC Mortgage, defrauded investors who purchased mortgage securities packaged by the companies from 2005 through 2007.

The firms made material misrepresentations about the quality of the loans in the securities, the lawsuit said, and ignored evidence of broad defects among the loans that they pooled and sold to investors.

Moreover, when Bear Stearns identified problematic loans that it had agreed to purchase from a lender, it was required to make the originator buy them back. But Bear Stearns demanded cash payments from the lenders and kept the money, rather than passing it on to investors, the suit contends.

Unlike many of the other mortgage crisis cases brought by regulators such as the Securities and Exchange Commission, the task force’s action does not focus on a particular deal that harmed investors or an individual who was central to a specific transaction. Rather, the suit contends that the improper practices were institutionwide and affected numerous deals during the period.

The lawsuit, however, is not Federal and relies on NY state banking law:

The decision to pursue civil charges under New York’s Martin Act means that the state’s attorney general will not have to prove fraudulent intent, only that the firm was negligent in making any false or misleading disclosures. While easier to prove, that also indicates that the evidence to prove fraud was not strong enough to bring more serious charges.

Like so many cases related to the financial crisis, no individuals are named in the complaint. Nor does it appear that any criminal charges will emerge this long after Bear Stearns was pushed into the arms of JPMorgan by the federal government in a transaction routinely described as a fire sale.

Yves Smith is skeptical about any large fines:

It looks like Eric Schneiderman is living up to his track record as an “all hat, no cattle” prosecutor. Readers may recall that he filed a lawsuit against the mortgage registry MERS just on the heels of Obama’s announcement that he was forming a mortgage fraud task force. Schneiderman’s joining forces with the Administration killed the attorney general opposition to the settlement, allowing the Administration to put that heinous deal over the finish line. The MERS filing was a useful balm for Schneiderman’s reputation, since it preserved his “tough guy” image, at least for the moment, and allowed his backers to contend that he had outplayed the Administration. [..]

Schneiderman has churned out another lawsuit that the Obama boosters and those unfamiliar with this beat might mistakenly see as impressive. It’s a civil, not criminal suit against JP Morgan he conduct of Bear Stearns in originating and misrepresenting $87 billion of mortgage backed securities (the link takes you to the court filing). And also notice no individuals are being sued. Being a banker apparently means never having to be responsible for your actions.

This suit appears just in time for an “October Surprise” and right before the first debate that will focus on domestic policies. This looks like more campaign PR.

Cross posted from The Stars Hollow Gazette

Financial Fraud Enforcement Task Force is the umbrella group for the RMBS (Residential Mortgage-Backed Security) Task Force. Remember that task force that was so gleefully announced by President Obama in his State of the Union address in January, appointing New York State Attorney General Eric Schneiderman to participate? Yeah, that one. It’s been under the radar for the most part and as yet has inadequate staff no office space or even a phone number.

The gang at FireDogLake has been relentless in tracking down what he FFETF and the RMBS have and haven’t done. My FDL contributor massacio has been a wizard at uncovering new releases that claim the groups are making progress when in reality the Obama DOJ is refusing to go after the big fish:

Like every one else who is following the refusal of the Obama Administration and its cowardly prosecutors to investigate Wall Street for crimes in the run-up to the Great Crash, I figured this was just a name given to a collection of prosecutors around the country who were already working on fraud cases.

The official website of the FFETF confirms this. [..]

I’ve gone back through February looking at the press releases, and this is a fair sample of the work of the FFETF. There is not a single case related to fraud in the creation, sale or operation of real estate mortgage-backed securities, the frauds that led to the Great Crash. The FFETF is a random collection of people working on cases that can be tied to financial fraud.

The FFETF and its 20 subpoenas and its 50 or more personnel and whatever else we hear from them are a sham. Wall Street has nothing to fear from the FFETF and its co-chair, Eric Schneiderman.

Richard (RJ) Eskow points out that Wall St. has nothing to fear from these task forces or for that matter from Attorney General Eric Holder:

Confidential sources say that the President’s much-touted Mortgage Fraud Task Force is being starved for vital resources by the Holder Justice Department. Political insiders are fearful that this obstruction will threaten Democrats’ chances at the polls. Investigators and prosecutors from other agencies are expressing their frustration as the ever-rowing list of documented crimes by individual Wall Street bankers continues to be ignored. [..]

A growing number of people are privately expressing concern at the Justice Department’s long-standing pattern of inactivity, obfuscation, and obstruction. Mr. Holder’s past as a highly-paid lawyer for a top Wall Street firm, Covington and Burling, is being discussed more openly among insiders. Covington & Burling was the law firm which devised the MERS shell corporation which has since been implicated in many cases of mortgage and foreclosure fraud. [..]

But there’s no evidence that Mr. Holder’s Justice Department has mounted a serious effort to investigate bank crime. Its first, much-touted “coordinated effort” to crack down on mortgage fraud turned out to be a PR trick, not a law enforcement effort, which the Columbia Journalism Review described with the headline, “The Obama Administration’s Financial-Fraud Stunt Backfires.” That’s not the kind of press a President wants to see repeated in an election year.

“Democrats have been having good luck painting Romney as the candidate of the one percent,” said one observer. “But that could change quickly with a few bad headlines.”

While nobody we spoke with was willing to raise the subject of a Holder resignation, they did insist that time was running out for the Attorney General to show concrete results.

Without criminal investigations and indictments, bankers will continue to commit crimes. The LIBOR scandal, which implicates a number of leading banks, proves that. The Justice Department’s inaction is putting the world economy at risk by allowing bankers to continue their reckless and illegal behavior.

The clock is ticking on many of these case since there is a five year statute of limitations under federal law for civil charges. There is now mounting evidence that Obama administration is letting that statute of limitations expire on the criminal charges, too. David Dayen at FDL News reports that he spoke with Rep. Brad Miller (D-NC), a member of the House Financial Services Committee, concerning the Justice Department stonewalling prosecutions of securitization abuses. He asked Miller about the coalition of housing advocates charging the Justice Department with stonewalling the investigation and denying it critical resources:

Miller, who at one point was a potential choice to be the executive director of the working group, said that he had not personally spoken with anyone involved in the task force since he missed out on the position in late February/early March. But as an interested observer, he made a few points. “It does appear that the task force is really not doing anything that the various agencies weren’t doing already,” Miller said. “They’re just saying they are doing it as part of this task force.”

And Miller added something else, that members of the various agencies associated with the working group have acknowledged this in conversations with members of Congress. Miller cautioned that he hadn’t heard this from agency officials personally, but that other members have. [..]

Miller also noted that the statutes of limitations, at least on criminal fraud claims, have almost certainly run out. “I said a few weeks ago that the clock on the statute of limitations was ticking like Marisa Tomei’s biological clock in My Cousin Vinny,” Miller said. “If there have not been extensions worked out in private negotiations, and if the law is that the statute runs from occurrence rather than discovery, it’s probably the case that most statutes have expired.”

And unless we forget our erstwhile Treasury Secretary Timothy Geithner, maybe up to his ears in the multi-trillion dollar LIBOR fraud:

The flames of the Libor scandal have been creeping up under the feet of Treasury Secretary Timothy Geithner. Evidence showed that the New York Fed found out about the rate-rigging from Barclays and other banks in 2007, when Geithner was still the bank President. This appeared to display regulatory impotence in the face of massive fraud. Geithner had to respond. And he did with a classic version of CYA. [..]

Geithner passed the documents around to anyone who wanted them last night. If there can be something less than the bare minimum, a two-page document to the Bank of England – not the banks implicated in the rate-rigging over which the NY Fed has control, but some other regulator – would be it. He didn’t speak out publicly, he didn’t use his regulatory power over the banks he had authority and in defense of the stateside financial products calculated using the Libor benchmark rate, he just wrote a memo.

The memo says that the Bank of England should “eliminate the incentive to misreport” Libor on the part of the banks. So there’s no doubt in the minds of the regulators that there was misreporting going on.

Timmy’s excuse for doing nothing now is that he did nothing then

The Federal Reserve Bank of New York will release on Friday documents showing it took “prompt action” four years ago to highlight problems with the benchmark interest rate known as Libor and to press for reform, an official at the regional U.S. central bank said on Wednesday.

As early as 2007, the New York Fed may have discussed problems with the setting of the London Interbank Offered Rate with Barclays Plc, the British bank currently at the center of the Libor scandal and investigation

Well, Timmy did send a memo.

Cross posted from The Stars Hollow Gazette

The much anticipated keynote address on the opening night at Netroots Nation 12 in Providence, RI was, I dare say, over two hours of my life I will never get back. While I understand the need for levity, thus the comedic interludes by emcee Baratunde Thurston, the number of speakers was just too many and they were unfortunately long winded, even for politicians. I wasn’t alone in that assessment. After nearly two hours Schneiderman had not reach the stage, so I decided to “stretch my legs” before I embarrassed my self by dozing off and falling out of my seat, although, it might have more entertaining for some than Mr. Thurston. I wasn’t alone. In the lobby outside the ballroom, I ran into an Obama supporter who found that she and I had something in common, this was booooooooring. I missed the New York Attorney General’s address and opted for the hotel restaurant for some food and libation. So here is the entire opening keynote with Schneiderman coming in at the last fifteen minutes.

Here is more agreement about the anesthesia effects of the evening from FDL blogger masachio

Schneiderman chose the pander speech. He started by explaining that real change comes from the grassroots, leaders emerge from struggles over real problems. That’s us, the Netroots! We are the leaders of the future!

He continues: We are in a transitional era now, just like the early 30s. We democrats stand for the rule of law applicable to everyone equally just like President Obama. Someone from the audience suggests loudly that locking up banksters would be a good start, and Schneiderman says he’ll get to that. Which he does a few minutes later saying that he can’t comment on the investigation he is doing. Everyone is really nice about this bit of foolery, and it was at this point I realized I would prefer to be drinking. I mutter at my tablemates that banksters and pot smokers do not face the same application of the rule of law, but no one hears me because they are stunned into dopiness.

The somnolence continues. [..]

After the speech, Schneiderman told a Talking Points Memo reporter that “nothing was off the table.” So if that’s true, when do the prosecutions start? Oh, wait, the “special unit” still has no office or telephone number after six months.

Cross posted from The Stars Hollow Gazette

85 days and counting since President Obama announced in his State of the Union speech the formation of the Residential Mortgage Backed Securities Working Group (RMBS) co-chaired by NY State Attorney General Eric Schneiderman and it is still a toothless entity that has so office space, phones and has yet to be staffed. The New york Daily News noticed, suggesting that Schneiderman should quit this fraud:

[..]calls to the Justice Department’s switchboard requesting to be connected with the working group produced the answer, “I really don’t know where to send you.” After being transferred to the attorney general’s office and asking for a phone number for the working group, the answer was, “I’m not aware of one.”

The promises of the President have led to little or no concrete action.

In fact, the new Residential Mortgage Backed Securities Working Group was the sixth such entity formed since the start of the financial crisis in 2009. The grand total of staff working for all of the previous five groups was one, according to a surprised Schneiderman. In Washington, where staffs grow like cherry blossoms, this is a remarkable occurrence.

We are led to conclude that Donovan was right. The settlement and working group – taken together – were a coup: a public relations coup for the White House and the banks. The media hailed the resolution for a few days and then turned their attention to other topics and controversies.

But for 12 million American homeowners, collectively $700 billion under water, this was just another in a long series of sham transactions.

Schneiderman, who has acted boldly and honorably, should distance himself from this cynical arrangement. He should resign and go back to working effectively with fellow attorneys general in Delaware, Massachusetts and Nevada.

They are much more likely to create the kind of culture of accountability in the financial community that will protect U.S. families from the next real estate scam.

According to a Reuter’s report, the office space has been located:

   The task force includes the Justice Department, the SEC, the FBI and the Department of Housing and Urban Development, among others. It is charged with investigating the pooling and sale of home loans that contributed to the financial crisis.

   While the group faced some skepticism, considering the crisis began nearly five years ago, there are signs it is serious about bringing cases.

   The co-chairs meet formally every week and talk almost every day to coordinate on “a range of investigations,” a Justice Department official said, on condition of anonymity.

   About 50 staff members are working on the effort, and the task force has identified separate office space in Washington and will move some personnel there, the official said.

   The Justice Department last month posted a one-year position of full-time coordinator for the working group who could help manage discovery and coordinate investigations, according to the job posting.

Yves Smith at naked capitalism agrees that Schneiderman has been had by the Obama administration:

It was pretty obvious Schneiderman had been had. Obama tellingly did not mention his name in the SOTU. Schneiderman was only a co-chairman of the effort and would still stay on in his day job as state AG, begging the question of how much time he would be able to spend on the task force. His co-chairman is Lanny Breuer from the missing-in-action Department of Justice. And most important, no one on the committee was head of an agency, again demonstrating that this wasn’t a top Administration priority.

However, she disagrees with the Daily News assessment of Schniederman acting “boldly and honorably” and that he can go back to working with the other attorneys general:

Schneiderman’s actions were neither bold nor honorable. Not surprisingly, his effort at a star turn in the national media has not led to favorable poll results for him in New York. And the Daily News offers a fantasy as an alternative. There is no “going back.” The attorneys general gave up their best legal theories, and with it, their ability to protect the integrity of title, for grossly inadequate compensation and a photo opportunity.

It would be better if we were proven wrong, but Schneiderman entered into an obvious Faustian pact. He’s not getting his soul or his reputation back.

Meanwhile as reported by Think Progress,

A recent report showed that mortgage foreclosure scams have spiked 60 percent in 2012, while the nation’s biggest banks continue to sit upon a slew of fraudulent mortgage documents. A recent investigation of foreclosures in San Francisco found that nearly all of them had legal problems or suspicious documents, prompting the city council to suggest a foreclosure moratorium.

Cross posted from The Stars Hollow Gazette

I supported Eric Schneiderman in his run for NY state AG in hopes he would carry on the legacy of Eliot Spitzer as the “sheriff of Wall St.” I was wrong, he sold out for whatever reasons, as did NY’s current governor Andrew Cuomo. In the article by Matt Stoller at naked capitalism, (a good analysis of NY AG Schneiderman), the comments about Clinton, Obama, Democrats and the alleged 2 party system would get them all banned from certain pro Obama/”Democratic” web sites.

Just a sample:

“Yeah, when ya get promoted from shaved ape and get sworn in as a human being, one of the things you do have to sign up for is the Torture Convention. This is true of everyone. Commit torture, condone torture, acquiesce to torture, and you are, in the technical legal terminology, hostis humani generis, enemy of all mankind. So in what parallel universe could notional “good Democrats” exist in a party whose leader, Barack Obama, openly violated Articles 12 and 16 of The Convention Against Torture?”

“It is quite amazing how the left-most Democrats on economic issues, like Schneiderman and Elizabeth Warren, casually support massive war crimes.

Look what Schneiderman and Warren support: massive secret wars in over 100 countries, drones that kill far more innocent than targets, cluster bombs, assassination lists, obscene rules of engagement that allow for the targeting of civilians, proxy wars, massive media manipulation and propaganda, and legalized torture.

The Democrats have surpassed even the Nazi party in their extremism!

Right now, in fact, the Democrats are aiding and abetting a criminal act of aggression against Syria (even down to the level of NGOs like MoveOn and Avaaz possibly supporting terrorism).”

“But…but…if Obama isn’t re-elected, then Mitt Romney will, uh… he’ll, uh… well, I guess he’ll do exactly the same things. But he’ll be a Republican, you see!”

The comments about Bill Clinton are equally scathing;

And what exactly did Clinton accomplish ? Repeal Glass-Steagall ? Undo the New Deal ? Start a private debt bubble that led to our current depression ?

But getting back to Schneiderman. He sold out, crossed over to the dark side. He went from being a hero to being a sellout. He’s got nuthin.

Don’t forget Clinton negotiated a deal to cut Social Security, which was only stopped by the Lewinsky scandal.

You forgot….in addition to eliminating Glass Steagall, Clinton also passed that wonderful “job creator” NAFTA…..remember?

But wait! That’s not all! From Slick Willie-for the same low, low bribe – you also got the Telecom Act, aka Rupert Murdoch Monopoly Act. And for a limited time, while supplies last, lobbyists will pay all your shipping and handling charges.

According to Common Cause: “…the Telecom Act failed to serve the public and did not deliver on its promise of more competition, more diversity, lower prices, more jobs and a booming economy.

“Instead, the public got more media concentration, less diversity, and higher prices.

“Over 10 years … cable rates have surged by about 50 percent, and local phone rates went up more than 20 percent.”

As WEB Dubois said in 1956 when he announced, I will not vote “:

In 1956, I shall not go to the polls. I have not registered. I believe that democracy has so far disappeared in the United States that no “two evils” exist. There is but one evil party with two names, and it will be elected despite all I can do or say. There is no third party.

I am nearly to that point. If there is no other choice but evil. I will not vote.

Cross posted from The Stars Hollow Gazette

Yes, they all lied, the the government and the state attorneys general, Schneiderman, too. The 49 state mortgage settlement that is  not written but was reached is not the narrow settlement that these actors would have you believe. In the Mortgage Settlement Executive Summary Section VII states:

   The proposed Release contains a broad release of the banks’ conduct related to mortgage loan servicing, foreclosure preparation, and mortgage loan origination services. Claims based on these areas of past conduct by the banks cannot be brought by state attorneys general or banking regulators.

   The Release applies only to the named bank parties. It does not extend to third parties who may have provided default or foreclosure services for the banks. Notably, claims against MERSCORP, Inc. or Mortgage Electronic Registration Systems, Inc. (MERS) are not released.

What does that mean? According to Yves Smith at naked capitalism it translates to a complete get out of jail free card

This is sufficiently general so that it is hard to be certain, but It certainly reads as if it waives chain of title issues and liability related to the use of MERS. That seems to be confirmed by the fact that made by local recorders for fees are explicitly preserved (one would not think they would need to be preserved unless they might otherwise be assumed to be waived). This is exactly the sort of release we feared would be given in a worst case scenario. The banks have gotten a huge “get out of jail free” card of bupkis.

Yves also quotes Frederick Leatherman who for a recap:

In one of his articles yesterday at Firedoglake, David Dayen mentioned that the settlement agreement has not been reduced to writing.

That is astonishing.

Let me repeat. That. Is. Astonishing.

The biggest problem with settlement agreements in particular, and all agreements in general, is reaching a so-called ‘meeting of the minds’ regarding the details and ‘chiseling them into stone’ by reducing them to writing. As I used to warn my clients when I was practicing law, we do not have an agreement until it has been reduced to writing, thoroughly reviewed, and signed by each of the parties. That has obviously not happened in this case.

Experience has taught us that humans dealing in good faith make mistakes, no matter how careful they are, and the potential for mistakes, misunderstandings and subsequent disagreements about the terms of an agreement cannot be overestimated. That potential becomes a certainty when one or more parties to an agreement is dealing in bad faith.

That, my friends, is why we have a law called the Statute of Frauds, which requires that certain types of agreements be in writing or they are invalid and unenforceable.

Yves take on Schneiderman and Biden’s involvement:

While the full terms have not been agreed upon, this seems to call into question the claim that Schneiderman got a carve-out for his MERS suit (and Biden had separately insisted that he had wanted to be able to add banks to his case against MERS).

But even with all these caveats, it’s hard to read the executive summary, which no doubt was vetted by the bank, Administration and AG sides, as meaning other than what it intends to mean: that the banks have been released of the meteor-wiping-out-the-dinosaurs-and-the-MBS-market liability they were most afraid of, that of the monstrous mess they made in their failure to convey notes as stipulated in their own contracts, and with their failure to use MERS as a mere registry, rather than a substitute for local recording offices. That in turns means that various cheerleaders for this deal, such as Mike “Settlement Release Looks Tight” Lux and Bob Kuttner have badly misled readers in their assertions that the release was narrow and the deal is good for homeowners.

The Obama administration and its advocates would have us believe that this agreement is going to help underwater homeowners and those who have been victims of foreclosure fraud. I’m not going to be delicate about this, it’s a bold faced lie. To make matters even worse Pimco’s analysis points out how this will damage pensions:

The government’s deal with banks over their foreclosure practices after 16 months of investigations is cheap for the loan servicers while costly for bond investors including pension funds, according to Pacific Investment Management Co.’s Scott Simon.

In what the U.S. called the largest federal-state civil settlement in the nation’s history, five banks including Bank of America Corp. and JPMorgan Chase & Co. yesterday committed $20 billion in various forms of mortgage relief plus payments of $5 billion to state and federal governments.

“This was a relatively cheap resolution for the banks,” said Simon, the mortgage head at Pimco, which runs the world’s largest bond fund. “A lot of the principal reductions would have happened on their loans anyway, and they’re using other people’s money to pay for a ton of this. Pension funds, 401(k)s and mutual funds are going to pick up a lot of the load.”

If anyone expects that that new panel with New York’s Attorney General Eric Schneiderman is going to ease the housing crisis and hold the banks accountable, I have some really cheap bridges for sale in California and New York.

Cross posted from The Stars Hollow Gazette

So one has yet seen the final agreement between the banks and the state attorneys general and it may be awhile before we do. And as Yves Smith at naked capitalism stated “You know it’s bad when banks are the most truthful guys in the room“:

Remember that historical mortgage settlement deal that was the lead news story on Thursday? It has been widely depicted as a done deal. The various AGs who had been holdouts said their concerns had been satisfied.

But in fact, Bank of America’s press release said that the deal was “agreements in principle” as opposed to a final agreement. The Charlotte bank had to be more precise than politicians because it is subject to SEC regulations about the accuracy of its disclosures. And if you read the template for the AG press release carefully, you can see how it finesses where the pact stands. And today, American Banker confirmed that the settlement pact is far from done, and the details will be kept from the public as long as possible, until it is filed in Federal court (because it includes injunctive relief, a judge must bless the agreement).

This may not sound all that important to laypeople, but most negotiators and attorneys will react viscerally to how negligent the behavior of the AGs has been. The most common reaction among lawyers I know who been with white shoe firms (including former partners) is “shocking”.

In fact as the American Banker points out the document does not exist:

More than a day after the announcement of a mammoth national mortgage servicing settlement, the actual terms of the deal still aren’t public. The website created for the national settlement lists the document as “coming soon.”

That’s because a fully authorized, legally binding deal has not been inked yet.

The implication of this is hard to say. Spokespersons for both the Iowa attorney general’s office and the Department of Justice both told American Banker that the actual settlement will not be made public until it is submitted to a court. A representative for the North Carolina attorney general downplayed the significance of the document’s non-final status, saying that the terms were already fixed. [..]

Other sources who spoke with American Banker raised doubts that everything is yet in place. A person familiar with the mortgage servicing pact says that a settlement term sheet does not yet exist. Instead, there are a series of nearly-complete documents that will be attached to a consent judgment eventually filed with the court. That truly final version will include things such as servicing standards, consumer relief options, legal releases, and enforcement terms. There will likely be separate state and a federal versions of the release.

Some who talked to American Banker said that the political pressure to announce the settlement drove the timing, in effect putting the press release cart in front of the settlement horse.

Whatever the reason for the document’s continued non-appearance, the lack of a public final settlement is already the cause for disgruntlement among those who closely follow the banking industry. Quite simply, the actual terms of a settlement matter. [..]

“The devil’s in the details,” says Ron Glancz, chairman of law firm Venable LLP’s Financial Services Group. “Until you see the document you’re never quite sure what your rights are.”

“It’s frustrating,” agrees Stern Agee analyst John Nadel. “But it’s not unlike anything else that’s been going on in financial reform generally, is it?” [..]

“It is hard for me to believe that they would have gone public in the way that they did if they didn’t have it all worked out. But it is unusual that we don’t have a copy of the settlement yet,” says Diane Thompson, an attorney for the National Consumer Law Center.

A spokesperson from the South Carolina AG’s office told American Banker that when the agreement is finalized it would be posted to this website “nationalmortgagesettlement.com,” which raised some eyebrows. David Dayen at FDL News Desk questioned why .com and not .org? Dayen also pointed out that by not having all the details ironed out is “just a shocking abdication of responsibility”:

This is incredible. The Administration, the AGs, everyone involved in this made a big show of an agreement reached on foreclosure fraud. But there is no piece of paper with the agreement on it. There’s no term sheet. There are just agreements in principle.

There’s a HUGE difference between an agreement in principle and the actual terms. I mean night and day. The Dodd-Frank bill was for all intents and purposes an agreement in principle. It left to the federal regulators to write hundreds of rules. And we have seen how that process of implementation has faltered on several key points. But the Administration wanted to announce a “big deal,” the details be damned. And they got buy-in from the AGs. Everyone else stayed silent.

Yves Smith appeared with Amy Goodman and Juan Gonzalez on Democracy Now to discuss just how bad this deal is.

The U.S. Justice Department has unveiled a record mortgage settlement with the nation’s five largest banks to resolve claims over faulty foreclosures and mortgage practices that have indebted and displaced homeowners and sunk the nation’s economy. While the deal is being described as a $25 billion settlement, the banks will only have to pay out a total of $5 billion in cash between them. We speak to one of the settlement’s most prominent critics, Yves Smith, a longtime financial analyst who runs the popular finance website, “Naked Capitalism.” “The settlement, on the surface, does look like it is helping homeowners,” Smith says. “But in fact, the bigger part that most people don’t recognize is the way it actually helps the banks with mortgages on their own books. … The real problem is that this deal is just not going to give that much relief.”

Yes, this could be a lot worse and won’t address the needs of the underwater homeowners or those who lost their homes through fraud.