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x-posted from the albany project

This is despicable and just reeks of corruption. I'd like to see our resident O-bots defend this steaming pile of suck:

Attorney General of N.Y. Is Said to Face Pressure on Bank Foreclosure Deal

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.

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.

Much more on the flip...

Extra chuztpah points for this line from Donovan:

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.

Did you see what he 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.

The ever excellent emptywheel explains:

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 coffin in the rule of law in this country.

Yves Smith adds:

So get this: we have unemployment at roughly 16% if you include discouraged workers, and many “employed” workers are underemployed. The housing market hasn’t bottomed; experts have pushed their hopes estimates from 2011 to 2012. And continued concerns about unaddressed chain of title issues may well impede any housing recovery.

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.

So how does the Administration rationalize its failure to do anything effective? It goes deeper into its propaganda hall of mirrors:

     Mr. Donovan said…“our view is we have the immediate opportunity to help a huge number of borrowers to stay in their homes, to help their neighborhoods and the housing market.”

This doesn’t even qualify as competent three card monte. “No, don’t look at what we are trying to do for the banks. Really, all we care about is homeowners!”

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.

And what does he get for the trouble? Arm twisting from DC (and much closer to home) to allow the state AGs (with an assist from DOJ) sweep all these crimes under the rug for good.

That's a disgrace.

As for that closer to home part, meet Kathryn Wylde, Head of the objectively pro-lawlessness Partnership For New York City as well as a Director of the Federal Reserve Bank of New York. Her position on the New York Fed is one that supposedly represents the "public." So where does she fall on these issues? More from Yves:

Finally, to the toad-hopping-out-of-mouth utterance, “Wall Street is our Main Street.” That came from finance’s favorite camp follower, Kathryn S. Wylde. As we described in an earlier post, she’s wiling to throw the rule of law under the bus to serve the interests of the banks who happen to be major funders of the business-promoting not for profit she heads. And she is also a director of the New York Fed. So it should not be surprising that she got in a “contentious conversation” with Schneiderman when they crossed paths in public.
Her argument, as she recounted it to the Times, is intellectually and morally bankrupt:

     [I]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.


     In this state, banks count for a lot, and therefore your job it to make their problems go away. You don’t seem to understand that you are supposed to act like a proper bought and paid for public official. Your role is to support big companies. You are to go after them only when the things they do make the public so angry that you have to help us make a credible show that the elites care about the little people.

If you think that is an unfair rendition of Wylde’s remark, consider the damage the major banks have done. They have failed so badly at being competent lenders and record keepers that when judges in New York demand that bank attorneys certify that they have taken reasonable steps to verify documents submitted to the courts, foreclosures grind to a near halt. Two separate investigations, one by Fortune, the other by the New York Post, ascertained that an overwhelming majority of foreclosures took place when the banks failed to demonstrate that they had the right to do so. Banks have foreclosed illegally on servicemen, and have also foreclosed on people who didn’t have mortgages. Their is ample evidence that they have systematically violated their own contracts, the agreements that govern mortgage securitizations, and have on a widespread basis charged impermissible fees to borrowers. And when these junk and pyramiding fees precipitate foreclosures, the servicers have effectively ripped off investors too. They have tooth and nail fought every effort that would help borrowers if it in any way impinged on their profits, even though their very survival is the result of taxpayer munificence. Finally, they’ve made a mess of property records in this country.

But apparently none of this, in the eyes of Ms. Wylde, rises to the level of being worth remedying, much the less “indefensible”. Given the ample of evidence of malfeasance, we must reach one of two conclusions. One is that she has no idea what is going on and therefore can be ignored as being not competent to opine. The other is that no amount of economic harm to individuals rates as being worth pursuing in her eyes. It appears that the only thing that might rise to the level of being “indefensible” is damage to life and limb, so all white collar crimes are exempt. This is a classic totalitarian, “might makes right,” argument.

And mind you, Wylde allegedly represents “the public” on the New York Fed’s board. With friends like this, who needs enemies?

Felix Salmon wrote today of a global crisis of institutional legitimacy, and although his tour started with Libya, it focused mainly on Europe and the US. If you want to know why the governed are withdrawing their consent in advanced economies, you need look no further than toadies like Donovan and Wylde who defend institutionalized profiteering and seek to undermine the few like Schneiderman who’ve managed, despite the odds, to get in a position where they might be able to do something to reverse it.

Someone has to stand up for the rule of law in this country. I'm damn glad we have someone like Eric Schneiderman who appears to be one of the dwindling few willing to stand up to the banksters and say, "Not so fast, fellas." If not for our AG and a few others scattered across the country, who would step up to protect homeowners and swindled investors from the very Fat Cats that blew the global economy up (again) in the first place?

Maybe we should all call our AG (800 771-7755 or 212 416-8000) or e-mail him and thank him for standing up to the banksters and their enforcers in DC. I bet he would appreciate the show of support.

And while you're at it, why not drop line to Kathryn Wylde and let her know that you expect better representation of your interests on the NY Fed. You can reach her at

Your Email has been sent.
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Comment Preferences

  •  it's been (4+ / 0-)

    2 YEARS since i've posted a diary here. krazy.

    and yeah, i know i'm probably not the first to publish something on this topic. sue me.

    "after the Rapture, we get all their shit"

    It's time: the albany project.

    by lipris on Mon Aug 22, 2011 at 01:01:12 PM PDT

  •  So...what's the sourcing for these "reports"? (3+ / 0-)
    Recommended by:
    Loge, farlefty, doc2


    One recipient described the calls from Mr. Donovan, but asked not to be identified for fear of retaliation.

    just doesn't cut it.

    More "unnamed sources".

    Sounds like someone may be exaggerating or got his fee-fees hurt.

    "Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity." --M. L. King "You can't fix stupid" --Ron White

    by zenbassoon on Mon Aug 22, 2011 at 01:04:12 PM PDT

    •  Then let the Administration deny it (6+ / 0-)

      There's no downside.

      Ok, so I read the polls.

      by andgarden on Mon Aug 22, 2011 at 01:37:51 PM PDT

      [ Parent ]

      •  Donovan confirmed that he supported the (1+ / 0-)
        Recommended by:

        settlement in the article.  This isn't an allegation of a specific threat of retaliation made.  This whole article is much ado about nothing -- reasonable people having adult discussions about whether to take a settlement now or risk litigation later.  As far as the rest of it, shorn of hyperbole, Kathryn Wylde doesn't speak for the administration and it's bad journalism for Morgenson to imply she does.  And while Emptywheel might be right on the policy merits, it doesn't mean that defending and trying to sell the settlement they negotiated amounts to bad faith.  

        Schneiderman's position is influenced likely by the fact that New York isn't as affected by foreclosures as other states, so building long term cases over firms in his jurisdiction probably matters more to him than getting money sooner.  That doesn't make him unethical, it makes his one voice among many trying to balance conflicting public interest considerations.

        I read that Blankfein hired a top white collar defense lawyer -- not an indicator that the feds are a soft touch.  (and it's one in DC, not NY.)  even still, crimes have to be pleaded and proved, and so far, other than very clear abuses at the mortgage origination and servicing levels, and shady but non-criminal actions in the sale of MBS's, the case hasn't been made.  

        "This world demands the qualities of youth: not a time of life but a state of mind[.]" -- Robert F. Kennedy

        by Loge on Mon Aug 22, 2011 at 02:16:55 PM PDT

        [ Parent ]

        •  I eagerly await hearing that defense (4+ / 0-)
          Recommended by:
          lipris, farlefty, costello7, blueoasis

          from the Administration itself.

          This is a discussion worth having publicly.

          Ok, so I read the polls.

          by andgarden on Mon Aug 22, 2011 at 02:19:48 PM PDT

          [ Parent ]

          •  Then read the underlying article (1+ / 0-)
            Recommended by:

            HUD and Justice went on record; Schneiderman didn't.  What does that tell you?  Either the journalist is being sensationalist, or Schneiderman's trying to play games with the feds but doing it very badly.

            "This world demands the qualities of youth: not a time of life but a state of mind[.]" -- Robert F. Kennedy

            by Loge on Mon Aug 22, 2011 at 02:23:14 PM PDT

            [ Parent ]

        •  i know eric (3+ / 0-)
          Recommended by:
          costello7, Albanius, blueoasis

          i even worked with him for 2 years.

          if the story was bullshit, he would have said so publicly already, probably before most folks here in NY were even awake.

          that's just a fact.

          "after the Rapture, we get all their shit"

          It's time: the albany project.

          by lipris on Mon Aug 22, 2011 at 02:23:58 PM PDT

          [ Parent ]

          •  maybe he thinks it serves his purpose (0+ / 0-)

            to let the Times "embarass" the feds.  (and how could he comment on other people's conversations - all anonymous - with federal officials in any event.)

            "pressured" is in any event a subjective concept.  

            "This world demands the qualities of youth: not a time of life but a state of mind[.]" -- Robert F. Kennedy

            by Loge on Mon Aug 22, 2011 at 02:29:42 PM PDT

            [ Parent ]

            •  Actually, I would be fine with that justification (1+ / 0-)
              Recommended by:

              I don't particularly care about being fair to the administration. I care about advancing good policy.

              Ok, so I read the polls.

              by andgarden on Mon Aug 22, 2011 at 02:35:01 PM PDT

              [ Parent ]

              •  nobody's hiding the ball on anything, here (0+ / 0-)

                the term sheet, and Schneiderman's objections, are all a few weeks old.  What we have is two federal agencies admitting to conversations with Schneiderman -- and why wouldn't they try go to get his participation in a settlement they negotiatied?  We have anonymous sources at unidentified groups claiming they had conversations with Shaun Donovan, which is weakly sourced and not remotely nefarious, when they won't say more than he was trying to get support for a deal he supports.  Then there's some lady who has nothing to do with the administration saying dumbassed things to Schneiderman that the administration would never say.  What is the story here?  

                It's possbile, I suppose to debate the merits of the Term Sheet and whether the money to be paid is worth the price of the releases to be granted, but this isn't that.  (My view: preliminarily defensible, and odds are everyone knew going in that the number would go higher or relesases narrowed to get full participation of various A's G.)  It's gossip.

                It's interesting that Schneiderman particularly doesn't dispute the statement "Eric and I agree on a tremendous amount here."  Reading between the lines, the feds would probably be thrilled if Schneiderman got more money for them to play with, and probably don't care about his own investigation which won't turn up anything materially different, but they also know the banks could walk away at any time.  That particular point, they can't really say out loud.  

                "This world demands the qualities of youth: not a time of life but a state of mind[.]" -- Robert F. Kennedy

                by Loge on Mon Aug 22, 2011 at 02:45:28 PM PDT

                [ Parent ]

    •  The administration believes that (0+ / 0-)

      this settlement is a good one for investors and will be much better for them than protracted litigation. You'd think that savvy kossacks would be suspicious of attorneys general that show up at the 11th hour to block a negotiated settlement. All AG's spend their time trying to get famous as tough fighters so that they can become governors. Is this AG blocking this deal because he really thinks that by blocking it the investors will fare better, or because it is a good career move for him?

      In the very least savvy politicos should be suspicious and not assume that he is in the right.

      Don't tell me what you believe. And don't tell me what you do. I barely know you.

      by doc2 on Mon Aug 22, 2011 at 03:35:56 PM PDT

      [ Parent ]

  •  I Read The Other Two Informative Diaries On This (2+ / 0-)
    Recommended by:
    Loge, doc2

    But I questioned their credibility since neither of them had "Banksters" in the headline.

    •  I'm actually suspicious unless the (1+ / 0-)
      Recommended by:

      diarist mentions at least once "corporatist plutocrat banksters". Banksters by itself just doesn't cut it anymore.

      Don't tell me what you believe. And don't tell me what you do. I barely know you.

      by doc2 on Mon Aug 22, 2011 at 03:38:35 PM PDT

      [ Parent ]

  •  Good to see you back around (3+ / 0-)
    Recommended by:
    SallyCat, WisePiper, blueoasis

    Ok, so I read the polls.

    by andgarden on Mon Aug 22, 2011 at 01:38:15 PM PDT

  •  nothing like laying off 10,000 to get your attenti (4+ / 0-)
    Recommended by:
    farlefty, costello7, Nailbanger, blueoasis

    Why do you think Bank of America is laying off 10,000 people.....its call a warning shot across the bow........

    do I really have to explain...........?

  •  I'm beginning to feel the same way... (1+ / 0-)
    Recommended by:

    about Eric Holder as I did Alberto Gonzales. Disgusting!

    Never attribute to malice that which can be adequately explained by stupidity.

    by reflectionsv37 on Mon Aug 22, 2011 at 02:24:12 PM PDT

  •  This fits nicely with the DoJ deferred prosecution (0+ / 0-)

    mill they set up for larger corporations, and now the copy the SEC has set  up:

    Important corporations that have settled without a public trial include Boeing, AIG, AOL, Halliburton, BP, Health South, Daimler Chrysler, Wachovia, Merrill Lynch, Pfizer, UBS and Barclays Bank. The crimes ranged from healthcare fraud to cheating the government on military contracts, bribing foreign governments, money laundering, tax evasion and violating trade sanctions.

    from the nation article, very worth the read.

    There is now officially two sets of laws and punishments, one for corporate america and one for everyone else.

  •  two things... (0+ / 0-)

    Judge Allows Intervention in BofA $8.5 Billion Pact

    A New York state judge granted the request of dozens of investors including pension funds, insurers and several Federal Home Loan Banks to intervene in Bank of America Corp's proposed $8.5 billion settlement with investors who lost money on mortgage-backed securities.

    New York Attorney General Eric Schneiderman also has expressed opposition.

    How We Can Really Help Families

    which was written by Donovan of HUD.

    The first suggests ES may be ultimately left alone to persue his case. The second is just to laugh at a lacky for our evidently republican president.

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