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New York Attorney General Kicked Off Government Group Leading Foreclosure Probe
WASHINGTON -- New York Attorney General Eric Schneiderman on Tuesday was kicked off the committee leading the 50-state task force charged with probing foreclosure abuses and negotiating a possible settlement agreement with the nation's five largest mortgage firms, according to an email reviewed by The Huffington Post.
New York Attorney General Eric Schneiderman Schneiderman was one of roughly a dozen state attorneys general leading the talks with the five companies, alongside representatives of the U.S. Department of Justice, the Department of Housing and Urban Development and other federal agencies. The government launched the negotiations in the spring after widespread reports of foreclosure irregularities, such as so-called "robo-signing" and illegal home seizures, emerged.
But state prosecutors and federal officials are pressing to complete a proposed settlement with the five companies even though they've initiated only a limited investigation that hasn't examined the full extent of the alleged wrongdoing, The Huffington Post reported last month. Elizabeth Warren, who until recently was a senior adviser to President Barack Obama and Treasury Secretary Timothy Geithner, told a congressional panel last month that government agencies may not have sufficiently investigated claims that borrowers' homes were illegally seized.
Schneiderman, a Democrat who's in his first term as New York's top law enforcer, has been among a group of state legal officers who has also questioned the desire for a speedy resolution. He's leading his own investigation into mortgage improprieties, subpoenaing documents from the nation's largest financial institutions and reviewing court records for possible illegal home repossessions.
The Obama administration officials -- in particular, Treasury Secretary Timothy Geithner and HUD Secretary Shaun Donovan -- have publicly stated on numerous occasions that they want a quick resolution to the 50-state mortgage probe.
Sources said attorneys general like Schneiderman, along with the top legal officers from Massachusetts, Delaware and Nevada, among others, were complicating that goal by questioning the plan to scuttle the state and federal investigations in exchange for a settlement.
These attorneys general have said they're reluctant to sign on to an agreement that effectively kills their ongoing investigations or prevents new ones from being launched. Beau Biden, Delaware's top law enforcer, remains on the states' executive committee.
In a statement of support for Schneiderman, Biden said that the "events leading up to the mortgage crisis must be fully investigated, including origination and securitization practices, before any broad immunity is granted."
"The American people deserve an investigation," he added.
Top Obama administration officials recently reached out to Schneiderman and his allies, effectively requesting he get in line, people familiar with the discussions said. The New York Times editorial board on Tuesday declared that Schneiderman "should stand his ground in not supporting the deal."
"The administration says that a settlement would quickly deliver much needed relief to hard-pressed borrowers, but it’s doubtful it would provide redress on a par with the banks’ wrongdoing or borrowers’ needs," the board wrote.
The email announcing Schneiderman's dismissal from the states' executive committee was sent just after noon to more than 50 people by Patrick Madigan, a top lawyer in the Iowa Attorney General's Office. It read: "Effective immediately, the New York Attorney General’s Office has been removed from the Executive Committee of the Robosigning multistate."
This month, Schneiderman accused Bank of New York Mellon, the 11th-largest U.S. bank by assets, of "repeated fraud and illegality" when it came to its actions as a trustee for various mortgage securities, and he accused Bank of America of fabricating missing documents when foreclosing on some homeowners who defaulted on their mortgages.
Bank of America's stock price is down more than 55 percent over the past six months. Investors haven't seen a closing price as low as Tuesday's -- $6.30 per share -- since March 2009.
The state and federal discussions with the targeted banks -- JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Ally Financial -- center on the banks providing distressed homeowners with reduced monthly payments, lower mortgage principal amounts or other relief in exchange for a release from liability for past illegal actions. An agreement could yield up to $30 billion to be used to allow troubled borrowers to remain in their homes or to help others move into rentals, according to people involved in the talks and documents reviewed by HuffPost.
The bigger the effective grant of immunity from potential government civil lawsuits, the more cash the companies are willing to pay to settle the accusations, these people have said.
The Obama administration, along with the top legal officers from other states leading the talks, including officials from Iowa and Illinois, has said the deteriorating state of the housing market should be a priority. By their reckoning, a resolution to these outstanding issues needs to be quickly achieved in order to save potentially hundreds of thousands of homeowners from foreclosure and to allow proper home repossessions to fully resume. Many companies halted home seizures last autumn after news reports of widespread robo-signing.
Foreclosures have since crawled to a halt, even though the number of homeowners delinquent on their mortgages remains sky-high, according to data compiled by Lender Processing Services and RealtyTrac. New delinquencies have ticked up, according to the Mortgage Bankers Association. Home prices continue to drop and are not expected to resume climbing until 2013, experts forecast.
Schneiderman is "committed to a comprehensive resolution," his spokesman, Danny Kanner, said in an emailed statement. "While we will continue to work with Delaware, Nevada, Massachusetts, and our other federal and state counterparts to achieve those goals, ongoing investigations by attorneys general cannot be shut down by efforts to settle quickly and those responsible must be held accountable."
Kanner said Schneiderman was removed at Iowa Attorney General Tom Miller's "prerogative."
Miller, through a spokesman, said that Schneiderman was "intimately involved in every aspect of this investigation and possible settlement" from the launch of the probe last October to this past June. Schneiderman was "on every internal [executive committee] conference call and participated in all conference calls and meetings with the top five mortgage servicers. As such, New York had a large influence on the actions and decisions of the multistate."
But in June, after The Huffington Post reported on a confidential conference call between state and federal officials, the executive committee was reduced to a smaller group of states that would directly negotiate with the five banks. Schneiderman was invited to join this smaller group, but declined, Miller said.
"Since that time, New York has actively worked to undermine the very same multistate group that it had spent the previous nine months working very closely with," Miller continued. "While we certainly respect the right of any state to choose to no longer participate in a multistate and to pursue another path, working to actively undermine a multistate while still a member of the Executive Committee simply doesn’t make sense, is unprecedented and is unacceptable. Accordingly, today I informed New York that it is no longer a member of the Executive Committee."
Schneiderman's removal will likely make it easier for state and federal officials to reach an accord with the five banks. However, the potential amount of money they'll be able to extract will likely decrease.
Schneiderman, armed with New York state's Martin Act, can bring suit against alleged fraudsters without having to prove that they intended to commit fraud, a much more lenient standard than available to federal securities regulators. New York's top legal officer is investigating whether banks followed the state's laws when bundling mortgages into securities.
That probe could prove explosive.
"If mortgages were not properly transferred in the securitization process, then mortgage-backed securities would in fact not be backed by any mortgages whatsoever," Adam J. Levitin, a bankruptcy expert and professor at Georgetown University Law Center, told a congressional panel last November. Levitin said the problem could "cloud title to nearly every property in the United States" and could lead to trillions of dollars in losses.
The banks targeted by state prosecutors and federal officials would rather settle claims that they improperly bundled home loans into securities than allow those probes to continue. In exchange, they'd shell out more cash to help homeowners and help the Obama administration avert foreclosures.
With a settlement into those investigations seemingly off the table, the banks would likely be willing to pay less in penalties.
29 Comments so far
Show AllOnce again we see who's side Obama is on; the Banksters!
Can't hardly blame the politicians who want to cover this up. That phoney foreclosure money got them elected. What an utter shame this country has become.
"By their reckoning, a resolution to these outstanding issues needs to be quickly achieved in order to save" Obama's re-election campaign!
"That probe could prove explosive."--Let it explode.
Exactly. Schneiderman is in a very, very tough situation, and with this much money at stake they'll work to shut him down somehow. I wonder if we should just let the whole mess fall. I'm reading more about Iceland's move to do this. Here's an interview from a show I rarely ever miss:
"We'll take it all down to zero; our houses drop another 20 percent; stock market falls out of bed and we have a depression. And then we can start coming out of the depression. And that worked, by the way, for Iceland. However, I don't know that I want to go through 20 percent unemployment and the pain of that. I think I'd rather my pain in measured portions over the next five or six years."
http://marketplace.publicradio.org/display/web/2011/08/23/pm-a-recovery-is-possible-but-will-take-time/
Here's Cenk's take on the this:
http://www.youtube.com/user/TheYoungTurks#p/u/9/ZL63bki4kzk
Listen towards the end: The New York Post did a small sampling of foreclosed homes. The result was faulty paperwork in 92% of the homes.
We need to let this baby explode, most definitely.
The banks would "shell out more cash to help homeowners and help the Obama administration avert foreclosures." But,"With a settlement into those investigations seemingly off the table, the banks would likely be willing to pay less in penalties." Just another case of Obama caving and giving away the farm before actually having to. Dump Obama in 2012--elect a progressive Congress and it won't matter whether the greater or lesser evil sits in the WH.
The layer of slime gets thicker by the day.
Absolutely, 3645.
It's layer upon layer, upon layer, upon layer of never-ending slime.
The GOOD NEWS is that Lloyd Blankfein, CEO of Goldman Sachs might be facing a trial for perjury. Check out the August 23rd business section of The Daily Beast for details.
Gail--This is off topic but I wanted you to know I was amazed to see your comment a few weeks ago about Dr Gerson. By the time I got back to the thread it had been archived for a few days.
I looked through the appendices/intro of "Results of 50 Cases" and could find no reference to arsenic poisoning. But, you know exactly who would do this--the same MD's and drug companies who are still destroying our access to natural medicine today. They are about to strip us of access to supplements and most people are oblivious.
Gerson testified before the Senate in 1946--claiming effectiveness for natural medicine treatments and practices. At that point he became a "traitor".
Par for the totally corrupted national course.
don't worry good people, it's just 11th-dimensional chess at work here, nothing to see, move along...
"The Obama administration officials -- in particular, Treasury Secretary Timothy Geithner and HUD Secretary Shaun Donovan -- have publicly stated on numerous occasions that they want a quick resolution to the 50-state mortgage probe."
QUACK QUACK QUACK!!!!
Speedy resolution, read, speedy cover-up.
hue_sir_name,
Speedy resolution, read, speedy cover-up.
Exactly!
There is no way that these people in charge of the U.S. Treasury or the Federal Reserve will ever want a full and complete accounting of what our banks and other financial firms have been doing. If such an accounting actually took place it would expose our nation's entire financial system for the house of cards that it actually is. One built on a foundation of hubris and criminal fraud.
These mortgage backed derivatives are exactly what Warren Buffet called them, "Financial weapons of mass destruction." Even worse are these so called "Credit default swaps". The two together are tens of trillions of dollars worth of lost wealth since they aren't worth near what Wall Street peddled them for, and in fact many are either completely or near worthless. The only thing that has kept the entire thing from blowing up so far is the fact that the Federal Reserve has been throwing trillions of dollars at these financial firms to keep them afloat. That most banks have returned to profitability is mostly due to taking these funds and investing them into government treasury bonds or playing in the stock market.
The financial bailouts of these firms wasn't done so much to keep them from going into bankruptcy or receivership as we've always had the capability to handle doing this as Sheila Blair has stated. The two big reasons were to make the large investors whole, those who's money wasn't covered by the $250,000 FDIC guarantee and to shield the banks and investment firms from having to publicly open their books which would have disclosed the true extent of the fraud.
This article provides the perfect example of the outright criminal fraud that was and still is rampant throughout the financial sector.
"If mortgages were not properly transferred in the securitization process, then mortgage-backed securities would in fact not be backed by any mortgages whatsoever," Adam J. Levitin, a bankruptcy expert and professor at Georgetown University Law Center, told a congressional panel last November. Levitin said the problem could "cloud title to nearly every property in the United States" and could lead to trillions of dollars in losses."
Of course the mortgages weren't properly transferred! We know this from the foreclosure robosigning debacle. When a home is purchased, the escrow company does a title search to ensure that the title is clear. Once the home is bought the title is registered with the county recorders office where the home was purchased listing the owner and the original lien owner. Each time a homes mortgage is transferred the paperwork is supposed to be updated at the county recorders office. By law, nobody has a legal claim on a home unless the title is amended at the county recorders office. This is where the banks lost control with foreclosures. They thought they could bypass the legal duty to update the title with the county with each transfer by creating their own computerized tracking system saving untold billions of dollars in county fees. Without this industry computer tracking system these mortgages could never have been sold and resold, let alone "sliced and diced" into small pieces and peddled by Wall Street because the
county fees, while individually small would quickly add up in quantity.
As far as the articles claim that these mortgage back securities would not be backed by mortgages or "cloud title" to homes, well yes and no. First, the securities wouldn't be backed by a legal physical claim to a home but as long as the homeowner paid the mortgage the financial industries paper trail should be sufficient to ensure the investor gets paid. Second is the "clouded titles". The titles on most homes still under mortgage are already "clouded". Since the financial firms never bothered to update the title at the county recorders office with each transfer as the mortgages were sold, the original, or perhaps the second or third mortgage firm is listed as the lien holder on the title even though they have no financial claim to the homeowners mortgage payment since somebody else owns the mortgage. Often this has gone through several permutations as the mortgages were sold and resold without any paper trail that the county or the homeowner could follow. And this is still going on, home mortgages are being sold on the secondary market even now without ever updating the original title.
This is one reason I and others kept saying during the great housing meltdown of 2007/8 that we needed to take things slow and not rush in to bail everyone out - even homeowners. We should have placed a moratorium on foreclosures back when the foreclosure wave first started and dealt with the problem of shaky titles then and there.
And this is only the tip of the financial fraud and bad assets iceberg!
Consumer Credit Card Debt, Consumer Auto Loan Debt, Small Business Loan Debt. Each of these are going to cause the banks major losses as this economic crisis continues. Pile on the pure Ponzi scheme that the stock market has become and how the major players have gamed the system along with their computerized trading that's wired straight into the stock exchange and things are only going to get worse.
Our government has deregulated, turned a blind eye to industry practices, and let it grow completely out of proportion to our economy to the point where our entire financial sector is not only rotten to the core but threatens our nation's very well being. The only sane and sensible thing to do at this point, regardless of how much pain it would cause would be to perform a full independent audit of each and every one of these firms and bring everything out into the open, letting loose the massive losses, banking failures, inevitable lawsuits, and most probably stock market crash. The longer we cover this up and let this fester the more painful it will be to resolve.
Anyways, That's my two cents!
There is a criminal element in control of our government. It is so obvious as to make the statement laughable. Matt Taiibi, of Rolling Stone magazine, recently published an article exposing corruption and insider dealing at the SEC which helps explain how things careened completely out of control. The main policing agency over Wall Street has been totally corrupt for a long time. Taiibi has uncovered the fact that the SEC has been illegally destroying nearly all evidence of wrongdoing found by their investigators systematically for nearly two decades as a matter of course despite it being blatently illegal. Read the explosive article here:
http://www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-20110817
So we know the fox has taken over the hen house. We the people are more and more being faced with the realization that events are forcing upon us the imperative that something be done about it and that electing liars who quack about hope and then appoint the same criminals as their predecessors is not going to be sufficient to avert disaster.
Yes, good reference, and it ties in here appropriately. Excellent article, as all of Matt Tiabi's are. One journalist who has no qualms about speaking the truth loud and clear.
The Fed / Obama throws trillions at these criminal organizations to cover their losses for their bad bets and scams (derivatives/credit default swaps/etc.), which simply sets the precedent that they are free to continue doing so, and can count on more bailouts if they ever screw the Amereichan people again. Here is another example - they get caught red-handed committing massive fraud on millions of homeowners, and rather than being tried in a court of law and fined to hell and back...Obama wants to grant them immunity and "settle," i.e., give them a little slap on the wrist for show and "move on - need to look foward, not backwards." Can you imagine how incredible our economy and our country would be if they threw trillions of dollars to the Amereichan people instead of these criminal organizations? Imagine what 2 or 3 trillion would do if it went to public education, infrastructure, a national jobs program, Social Security, Medicare, Medicaid, etc.! The same fraudulent corporate whores who gave TRILLIONS to Wall Street, and continues to cover for their crimes, has the balls to claim we need to slash wages, SS, Medicare, Medicaid, and all other public programs to "reduce the deficit." If those trillions hadn't been given to Wall Street in the first place, we wouldn't even HAVE a deficit.
This country is sinking faster with every passing week. I'm almost afraid to wake up everyday, the slide downhill is happening so fast.
Yes, Taibbi's article documents the rot and crime that one day will be accounted. You point out the self-evident madness of our spending priorities, squandering trillions on bailouts and I would add wars, while looting the commonwealth for private profit.
The New Deal legacy alone, now nearly 80-years old is enormous. It includes landmark legislation, Social Security, the FDIC, the Soil Conservation Service, the USDA the WPA and CCC. The latter two employed about 10 million people and yielded the following staggering number of built works according to UShistory.com, StetsomKennedy.com and Random House.com.
• 100 airports and 700 miles of runways (incl. Washington DC, Chicago, and NY’s LaGuardia Airport.)
• 78,000 bridges (incl. Golden Gate Bridge, the Lincoln Tunnel and Triborough Bridge)
• 125.000 buildings (civic buildings, libraries, universities, schools, playgrounds, hospitals, theaters, housing etc)
• 650,000 miles of roadway and railways ((Blue Ridge Parkway (Skyline Drive) Key West’s Overseas Highway, Pennsylvania Railroad)
• 8,000 state and national parks: reforestation (3 billion trees) lodges, trails, fire towers, campgrounds and facilities, (incl. Maryland’s Camp David, Shenandoah National Park and lodge, Timberline Lodge, Red rocks Ampitheater in Colorado)
• New greenbelt towns in Maryland and Wisconsin
• Levees. Dams, sewage treatment plants and utility networks (Rural electrification Act; Tennessee Valley Authority; Grand Coulee Dam; Ft. Peck Dam in Montana; Norris Dam in Tennessee)
• Plus art, school lunches, disaster relief and firefighting
This New Deal commonweal, despite its neglect and decay, continues to create wealth. And this doesn't include the GI Bill, which after WW2 also resulted in increased taxes because of greater personal incomes that were eight times greater than the cost of the program; it doesn't include NASA, the interstate system, the NIH, etc., etc..
This is the self-evident economic solution that our current misleadership is now willfully embezzling for a parasitic plutocracy---a clear case of malice aforethought and depraved indifference. This suspension of law for those in high places, it will inevitably trickle down.
Excellent facts and observations, thank you so much for stating this.
Investigations of the illegal activities of banks are stopped.
Investigations of the crimes of embezzlement, collusion and insider trading of financial institutions on Wall Street are stopped.
Investigation of a crime of mass murder on an unprecedented scale per 9-11-2001 are stopped.
Investigations of war crimes by senior officials of the administration are stopped.
The three branches of government, legislature, judiciary, and executive, have been entirely corrupted and now stand paralysed unable to dislodge any of the branches of a cancerous tumours rapped around the entire system.
This is the disease that unrestrained greed and power has spawned, The USA's level of economic inequality has been brought to near the level of Mugabe's Uganda, while the government's expenditure on "homeland" security is at record levels in an economic downturn which is causing the penury of austerity measures.
hummm, I wonder where this is heading? How the inevitable US regime change will be effected and described after the fact? I wonder if international legality will continue to be as elastically portrayed as Obama can spin it? I hope that the irony of his statements in this speech will appear as pathetic as they should in 5 years when people look back at the times before.
http://www.youtube.com/watch?v=dFs0ub7MRDQ
That should be Mugabe's Zimbabwe. But point well taken. If it were justice, it would be conducted out where we can all see it.
Ha! A $30 billion "settlement" for a $7 trillion crime!
My back of the envelope calculation shows this as less than 1/2 cent on the dollar!
My plan is much better. Put all these guys in prison, seize their assets and create a super fund to be redistributed back to the victims.
A simple, yet elegant solution.
Agree -- and these are the terms we need to be thinking about in regard to corporations which have done such great harm -- especially to the environment,
nature.
These corporations need to be folded and their assets confiscated -- and the leaders put in prison.
Thank you!
"The bigger the effective grant of immunity from potential government civil lawsuits, the more cash the companies are willing to pay to settle the accusations, these people have said."
Bullshit. "Fool me once, shame on you; fool me twice..."
Yes, but where do they even get the money to "settle" if not by further soft loans from the Fed : http://topics.bloomberg.com/fed-loan-disclosure/ and these loans are issued against what collateral?
No one can do anything else except kick the can down the road some and lie some more about the reality of the situation.
The "people" are screwed ever more and inevitably in a society built on debt in which the power of the creditor to create debt is absolute and therefore abused because the function of government to make, adjudicate and execute laws that control them (the bankers) is in of itself controlled by the creditors. As a system it is the dragon that eats its own tail, but in reality its the people that (will) pay in blood first to slay the dragon, and then again and again in sweat and tears to rebuild some sustainable system in which the survivors might live. And, 99.9% of the population don't even see the dragon in the room right now and believe that altering the position of some deckchairs on first class deck on the MS Washington, while steerage is already underwater, and prayer of course, is going to change things......
Off with their heads!
The Obama administration is settling for half a loaf to get this issue off the table before Nov. 2012 and curry favor w/banks for campaign cash. Schneiderman can't turn his back on this; Wall Street is in his state. Tom Miller doesn't care, because Iowa wasn't seriously exposed to this mortgage mess. By contrast, Nevada has gotten killed by it. The fault is in greedy banks, lazy (laissez?) government, and a general attitude that nothing is wrong as long as everyone is getting paid. Ponzi economics.
“In a statement of support for Schneiderman, Biden said that the ‘events leading up to the mortgage crisis must be fully investigated, including origination and securitization practices, before any broad immunity is granted.’"
So sorry for the cynicism; Biden may not deserve it, but this sounds so much like another politician we know to well when he too was maneuvering for loftier office. Obama the campaigner was against Telecom immunity before he voted for it; he supported FISA accountability before he was against it . . . ditto for every successive campaign pledge on GITMO, war, torture, taxes, NAFTA, unions, etc., etc., ad nauseam. The VP’s son may well be an honest politician---and camels may also thread needles.
“The administration says that a settlement would quickly deliver much needed relief to hard-pressed borrowers . . .” Right, just like the farcical HAMP program, designed to HAMPER beleaguered borrowers while aiding and abetting the looters and kicking the can closer to the cliff. HAMP was hooked bait that produced mostly denied applicants who were saddled with even more debt by the end of the grueling process in retroactive penalties, late charges and jacked interest rates. It was worse than a scam; it was and is organized crime. Finacial crimes on top of war crimes.
Time to be thinking about trying to end this corruption --
We need a challenger to Obama -- and/or we need a viable third
party candidate.
Anyone here going to vote for more of this or more movement to the right?
Iowa AG Miller accuses NYork AG Schneiderman of attempting to undermine the multistate effort. How? By not accepting a $30 billion settlement on a $7 trillion fraud (while if memory serves Dean Baker would put that higher...)? Also, just for the record it would have been nice if this article had done what standard journalism usually does with such stories---list party affiliation.
Somehow this all reminds of Dr. Strangelove, where events spiraled out of control until "Yee-Haw!" Ride 'em cowboy. Kaboom. Not even a "SPLAT".
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