Wall Street wins again

David Dayen on why accountability for Wall Street is still a sick joke:

A year ago, President Obama gestured toward the first lady’s box at the State of the Union address at Eric Schneiderman, the attorney general of New York. Schneiderman had just agreed to co-chair the Residential Mortgage-Backed Securities working group, an initiative between state and federal law enforcement officials and bank regulators, designed to investigate and prosecute fraudulent Wall Street activity that led to both the creation of the housing bubble and its collapse. In exchange, Schneiderman dropped his objections to a settlement over some of the banks’ fraudulent post-crash activity, particularly around fraud in foreclosure processing.


Recent profiles of this event have called last night’s State of the Union the “anniversary” of the formation of the working group. But you can’t really have an anniversary of something that never existed in the first place. There never was a Residential Mortgage-Backed Securities working group, never a so-called task force dedicated to ferreting out Wall Street fraud — the deceptive origination of mortgage loans, sale of worthless mortgage-backed securities for huge sums, and subsequent unloading of toxic debt to unsuspecting buyers. The working group fails to exist as a tangible entity to this day. What does exist is the same years-old Financial Fraud Enforcement Group that serves as a conduit for press releases about investigative actions already in progress.


Schneiderman’s “task force” (a generous appellation) was merely a politically motivated shell organization grafted onto that public relations strategy. This was evident almost from the moment of the announcement, but the coalition of self-proclaimed bank accountability advocates, who had backed the administration into a corner over the lack of prosecutions, decided to align with Schneiderman and his kabuki task force, losing whatever leverage they may have had. If those same groups who feel “betrayed” and “lied to” had stayed on the outside and shamed those in power into action, we would probably have more accountability today.


Within a few months of the State of the Union announcement, a hearing in the House Financial Services Committee confirmed the essentially invisible nature of the task force. Maxine Waters, then a senior member of the committee and now the Democratic ranking member, asked Robert Khuzami, then the head of enforcement for the Securities and Exchange Commission, whether the entity had sufficient resources to investigate. Khuzami replied that the agencies involved – the SEC, the New York AG’s office and the Department of Justice – were supplying the resources. No new dollars were dedicated to the effort. When Waters asked when the task force would hire an executive director, Khuzami said they hired a “coordinator” to facilitate inter-agency activity. Specifically, he uttered this incriminating evidence: “We hired a coordinator, but most of the investigative work being done here is not really being done by a staff that belongs to the task force, it’s being done by the individual investigative groups that make up the task force.”


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.

Go read the rest if you have the stomach for it.

6 Responses to Wall Street wins again

  1. coloradoblue February 14, 2013 at 11:11 am #

    “Go read the rest if you have the stomach for it.”

    Nope, don’t have the stomach for it Susie, nor do I have the stomach for any of O’s lies and failure.

    Here’s a question for you. Who is worse, Bush or Obama?

    Worse for the US, worse for the world, worse for the future. Which is/was the bigger failure?

    My ‘vote’ goes to O.

  2. imhotep February 14, 2013 at 11:14 am #

    Congress, not the President, makes the laws. Congress, not the President, funds the enforcement mechanisms of the laws it passes. If Congress doesn’t want something to happen, like, say, closing down Gitmo, then it’s not going to be closed. Ever. If Congress doesn’t want a Consumer Protection Agency then Comgress will not appoint anyone to run it and they won’t give it any money. What’s a President to do??? Become a King????

  3. imhotep February 14, 2013 at 11:16 am #

    coloradoblue, then you’d be wrong. Wanna know why? Or aren’t you that interested?

  4. jawbone February 14, 2013 at 1:32 pm #

    Please, Im–let us know why Bush is indeed worse than Obama. Thanks.

  5. Allie February 14, 2013 at 3:10 pm #

    Hey I wanna know what happened to that Women’s and Girl’s task force he set up for Valerie Jarrett to run. I haven’t heard one tiny peep about them since he did that.

    Hey and how about the that CFPB that he let Elizabeth Warren form and then ditched her for some guy who isn’t doing anything with it.

    Oh wait – at least he salvaged the Simpson-Bowles Commission that Congress tried to ditch. At least there’s that.

  6. lless February 14, 2013 at 4:21 pm #

    Wrong again Imho. Obama could close Gitmo by executive order and there isn’t a damned thing they could do. It’s called separation of powers. He could close that thing today and just leave the prisoners to Castro. It would certainly be a fitting thank you for the Mariel exodus.

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