enforcement - Represent Consumers

Left, right and left out

On so many issues related to the state of our economic recovery, current notions of liberal and conservative don’t seem to apply.

For example, should we allow a real free market to work in our financial system?

Should we crack down hard on those Wall Street bankers who broke the law?

Should companies that want to foreclose on property have to follow the law?

If you’re in favor of real financial free market, tough law enforcement and following the law, are you conservative or liberal, left or right?

What you are is in the majority, and the most important political designation in the U.S. in 2012 – left out.

Your views are reflected only rarely in the political debate at all and never in the presidential debate. Sure, President Obama has repeatedly promised to get tough on Wall Street, most recently in the state of the union in January, but based on the results, those promises have little credibility. President Obama preaches for an activist role for government with the occasional populist flourish, but that impulse wilts if Republicans or campaign funders show the least resistance.

His opponent, Mitt Romney, considers any crackdown on Wall Street an affront to the beloved job creators to whom we should all be bowing down – even if they don’t actually use their wealth to create any decent jobs.

What we get instead of a real debate on how to get an economy that works for ordinary folks is a faux argument over the role of venture capitalist tycoons, between the candidate who used to be one and our president, who has relied on them a key source of campaign funding as much as Romney has.

What we get is the fiscal cliff drama about whether or not to shut down the government.

What we get is each side offering scary versions of what the other will do.

What we get are Mitt Romney’s assurances that if we just get the regulators out of the way, the wealthy job creators will get to work, regardless of whether anybody can afford to buy their products.

What we get is the president’s half-measures and handwringing. But it’s all political theater that doesn’t replace real jobs, real plans to revive housing and keep people in their homes and real accountability for bankers. It doesn’t replace a real debate about the role of big money in overshadowing those issues in our elections. Right now, both sides have left those out of their campaigns.

Politics is a team activity and our natural tendency is to root for our guy, downplay his flaws, and point out how much worse the other guy would be. But this election should not just be rooting for our team and beating the other guy. It should not be about rooting for our guy we’re so hyped up about how scary the other guy is.

It should be about who is willing to confront the big money, not bend to it.

It should be about who can really get people back to work, keep us in our homes, guide an economic recovery that’s not just for the wealthiest.

We should demand that we’re more than just a rooting section for our team, that our bread and butter concerns are not left out.

Busting Wall Street, by the numbers

How many FBI agents does it take to bust one Wall Street crook?

This isn’t the beginning of a joke. It’s one way to measure how serious the Obama’s administration latest highly touted financial fraud task force is about tackling its beat.

The task force is staffed with 10 FBI agents, according to U.S. Attorney General Eric Holder.

You can get some idea of whether that’s an adequate number by comparing it to the law enforcement effort in the wake of the Savings and Loan crisis in the 1980s, a major but vastly smaller financial collapse.

It only cost the taxpayers a mere $150 billion in bailout money, compared to the 2008 banking collapse, which cost us trillions.

Bill Black, a former S&L regulator turned white-collar criminal law expert and law professor at University of Missouri at Kansas City, has been one of the sharpest critics of the administration’s sharpest critics.

Black makes the point that regulators investigating S&L fraud two decades ago made thousands of criminal referrals, and the FBI assigned 1,000 agents to follow up on those referrals. Black says the referrals led to more than 1,000 felony convictions, including the executives of the S&Ls.

Black is just one of many who have noticed that President Obama’s heart has not really been into the task of putting top bank executives in jail.

As recently as December 11, the president told 60 Minutes in an interview: “I can tell you, just from 40,000 feet, that some of the most damaging behavior on Wall Street, in some cases, some of the least ethical behavior on Wall Street, wasn't illegal.”

Black points out that this at best a non-answer; at worst it’s double-talk. The president says that “some of the most damaging behavior on Wall Street, in some cases some of the least ethical behavior on Wall Street, wasn’t illegal.”

So the reasonable follow-up question would be: where are the prosecutions, over the past 3 years, of the rest of the behavior, the part that was illegal?

The other aspect of Obama’s answer that I find worrisome is the president’s perspective – he acknowledges that he’s making a judgment based on a view from 40,000 feet.

That’s a distance of 7.5 miles. The president isn’t predicting the weather here; he’s talking about whether crimes were committed in the process of the worst financial disaster in almost a century.

Good prosecutors and FBI agents don’t investigate from 7.5 miles away. They get in a suspect’s face, and into their history, find out who their friends and associates are. They dig into their family lives if they need to.

That’s how they operate when their hearts are in it if they want to make the case.

But even when their hearts are in it, good law enforcement people can’t do their jobs without resources.

And that’s a decision the president can make. He doesn’t have to ask Congress.

Call the president today and let him know that we won’t be fooled by faux enforcement efforts, and the we know the difference between what 10 FBI agents can do and what 1,000 can do – even from seven miles away.

Financial Crisis / Martin Column / President Barack Obama - 01/29/2012

Stop Forecclosuregate Bailout

Is President Obama going to try to sell us another bank bailout in his State of the Union address tonight?

Of course, he won't call it a bailout. He'll tout it as “the largest multi-state settlement of charges of wrongdoing against corporate malefactors in history;” something that sounds important and unprecedented.

But don’t be fooled, a bailout is exactly what Obama administration officials are scheming, under the guise of settling foreclosure fraud charges against the big banks.

The fraud stems from widespread robo-signing in which banks used forged documents or had employees sign off on documents they hadn’t read.

The Obama administration has been pressuring state attorneys general to end a joint federal-state investigation with a sweetheart deal that would amount to another bailout for the banks – rewarding them again for their bad behavior, this time with a light slap on the wrist.

Unlike in 2008, we know a lot more about how government officials under the influence of Wall Street misbehave. When administration officials met privately with state AGs Monday in Chicago, they were met with protestors, and a number of groups have been mobilizing phone calls to the White House and state AGs.

Let me give you some perspective: Banks have made hundreds of billions off the adjustable, high-interest loans they pawned off on borrowers, then sliced and diced and resold to investors until the bankers’ shenanigans sank our economy. Now the Obama administration wants to settle with them for between $19 and $25 billion in fines. Some of that money could be sent directly to 750,000 borrowers who were found to be victims of robo-signing. But there haven’t any thorough investigations to determine the full scope of that scandal or how many people were actually effected. Part of the money could be used to reduce principal (by a piddling $20,000) for a small number of homeowners, and some could be used to pay housing counselors, who provide advice for people facing foreclosure.

But as in previous foreclosure reduction efforts and previous settlements with the banks, enforcement and accountability are completely lacking.

And while $19 to $25 billion may sound like a lot of money to us, to the bankers, it’s pocket change: It’s neither punitive nor a deterrent.

This foreclosure deal is so bad that Kamala Harris, the California AG who is a close ally of the president’s, walked away from it, promising instead to join with Nevada’s AG to scrutinize the bankers’ foreclosure practices more closely.

In doing so, Harris is behaving like real law enforcement official, not a bank apologist. Like any prosecutor, she knows she has to have solid evidence in hand before she talks about a plea bargain.

A handful of other state AGs are expressing skepticism about the proposed settlement, but the Obama administration continues to pressure the AGs to settle before the banks’ behavior is fully investigated and understood.

As MIT economist and Baseline Scenario blogger Simon Johnson told Dave Dayen at Firedoglake, “Why go small when you have a strong case for fraud?”

Harris isn’t the only one who walked away from what she saw as a shabby deal for her constituents. The New York AG, Eric Schneiderman also balked, and when he started to question the deal, he was booted off the negotiating committee. What particularly disturbed Schneiderman was the notion that as part of a proposed settlement, banks would get immunity from lawsuits, not only relating to robo-signing, but for other mortgage-related fraud as well.

“I wasn't willing to provide a release that ... released conduct that hadn't been investigated, essentially,” Schneiderman told National Public Radio. Schneiderman has started his own investigation.

Initially the joint state-federal investigation looked like it had teeth. Back in 2010 when the process began, Tom Miller, the Iowa AG who headed the multi-state task force, stated bluntly: “We will put people in jail.”

What happened?

Remember what Deep Throat told investigative reporters Woodward and Bernstein during Watergate: Follow the money.

After Miller launched that initial investigation of the banks’ foreclosure practices, he raised $261,445 from finance, insurance and real estate interests – more than 88 times as much as he’d raised before the investigation. Not all that much money in the scheme of things, but apparently enough to inspire him to back off. Now Miller is leading the settlement juggernaut.

Where we see fraud, our leaders see financial opportunity.

We can’t let Miller and the Obama administration let the banks off the hook again at our expense. We want thorough, transparent investigations and indictments where appropriate.

Please call the White House today and tell them that if it walks like a bailout and quacks like a bailout, we’ll know it’s a bailout, no matter how administration officials try to dress it up.

And we don't want any more bailouts.

Foreclosure / Martin Column / President Barack Obama - 01/24/2012

Top 4 Lesson Big Bankers Can Teach Us

America’s bankers have been extraordinarily effective in responding to a financial crisis that they created. They’ve worked hard to make sure that the response to the crisis didn’t threaten their fat bonuses or their awesome political power.

They succeeded in gutting the toughest aspects of financial reform. Then they started lobbying the regulators who will have the enforcement power.

Now they’re toiling to undermine a proposed settlement with authorities over widespread abuses in the foreclosure process, and demonizing consumer champion Elizabeth Warren and the Consumer Financial Protection Agency in the process.

Of course they’re getting plenty of help from their government enablers. As Gretchen Morgenstern reported in the New York Times, the 50 state attorney generals who are supposed to be spearheading the investigation into the foreclosures aren’t doing any actual investigating.

This puts them at a definite disadvantage when they sit down to negotiate with the banks.

Those of us who aren’t bankers and would like to see a different outcome could learn a few things from the bankers.

How do the bankers do it?

They’re relentless. They don’t take no for an answer and they don’t know the meaning of defeat. They have lots of money and they’re not afraid to spend it on campaign contributions and lobbying. While we may not be able to match their cash, there’s no reason we can’t be as relentless as the big bankers. They wouldn’t still be in business, let alone raking in billions in bonuses, if we hadn’t bailed them out.
They have no illusions about loyalty. They spent big to elect President Obama. But when it looked like they could get more from the Republicans, they switched sides. Nobody can take their support for granted.
They have no shame. They never apologized for all the risk and fraud that created the collapse. They never offered to tighten their belts or pick up part of the tab. They just kept fighting for their selfish interests.
They maintained their sense of humor. How else do you explain their carping about how anti-business the president is, while Obama’s team does whatever it can to prop up the “too big to fail banks” while wringing its hands that it just can’t do any more to help the unemployed or distressed homeowners?

Financial Crisis / Financial Reform Legislation / Foreclosure / Martin Column / Outrage - 03/19/2011

Around the Web: Rewarding Fed Failure

Bottom line on the new Chris Dodd reform proposal: much watered down from his earlier proposal and maybe even weaker than the weak House bill.

Here’s the summary from A New Way Forward: “The bill contains no real solution to too-big-to-fail, no real enforcement guarantees, the bad guys are off the hook, the financial system will continue to be as big and dangerous and full of risk taxpayers will likely own. Dodd made a few good steps forward and major steps backwards”. The rest of their analysis is here.

From the Atlantic Wire, a solid roundup of assessments. The takeaway: Too many concessions to the big banks, and it is still faces many obstacles to passage. And who exactly besides Chris Dodd and Wall Street thinks it’s a great idea to house consumer protection within the Federal Reserve? Only last year, Reuters reminds us, Dodd was labeling the Fed “an abymsal failure."

But Elizabeth Warren, the congressional bailout monitor who has campaigned aggressively for strong reform, including an independent agency to protect financial consumers, offered a lukewam endorsement of Dodd’s plan.

I’ll give Alan Sherter the last word. When Dodd says that he doesn’t have the votes for an independent financial consumer protection agency, what he really means is that “lawmakers have more to gain by advocating the interests of banks than those of consumers.”

Around the Web / Consumer Financial Protection Agency / Derivatives / Executive Pay - 03/15/2010

Go Ahead, Put All Your Eggs in Our Basket

A simple homily illustrates the folly of letting Wall Street govern itself free of restraints so that a handful of financial firms could become indispensable to our nation’s economy: “don’t put all your eggs in one basket.”

One of the precursors of the financial meltdown was the combination of zero enforcement of the antitrust laws and the repeal of Depression-era safeguards against allowing banks to engage in speculation in the stock markets. That created a handful of financial institutions that were individually and collectively so interwoven with our economy that when the crash came last year, we were told that they had to be rescued or else their collapse would take down the entire system. These giant firms were so important that, we were told, they were just “too big to fail.”

Harvey Column - 11/10/2009