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May 20, 2011
Probe into banks by New York Attorney General
The Attorney General of New York state has opened an investigation into the practice of mortgage loan packaging by the big banks and investment firms like Bank of America, Morgan Stanley, and Goldman Sachs. It was these practices that led to the real estate bubble and subsequent collapse.
This is a hopeful sign since we cannot expect the Obama administration's justice department to take any serious action since the White House has long been a wholly owned subsidiary of Wall Street.
Matt Taibbi, who has been relentless in driving this story forward, is cautiously hopeful that something meaningful might come out of this.
This investigation has the potential to be a Mother of All Nightmares situation for the banks for a couple of reasons. For one thing, the decision to go after the securitization process is a total prosecutorial bullseye. This is the ugly heart of the wide-scale fraud scheme of the bubble era.
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The reason this is such a potentially deadly investigation for the banks is that they seemed to be so close to getting away scot free. There is another investigation into the banks’ mortgage abuses by the states’ Attorneys General, led by Iowa AG Tom Miller, that was rumored to be headed toward a settlement, despite the fact that nothing like a complete investigation has been done.
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Such a desire to get some kind of deal done and sweep the mortgage mess under the rug once and for all seems almost universal among high-ranking politicians, and particularly in the Obama administration, which has acted throughout like it wants more than anything to simply get all of this over with and put in the past.
I am going to wait and see how this turns out. The oligarchy is going to close ranks and pull out all the stops to defend itself and preserve its privileges and get away with a plea deal that involves just a slap on the wrist and fine.
Comments
So, how much do you want to bet that some sort of skeleton will fall out of AG Schneiderman's closet? What will it be this time, eh? We had a hooker for Spitzer, when he had the temerity to start asking awkward questions, so we'll need something different... perhaps a financial impropriety like not paying household employment taxes for his maid? It doesn't need to be anything even remotely close in magnitude to the crimes being investigated.
More seriously, one would assume that the captive federal government cannot possibly allow this state prosecution to succeed where they won't even try. Bloody federalism! Some sort of pressure - a carrot or a stick - will have to be brought to bear on New York State to make this go away, or end with a token slap on the wrists.
The President's announcement of the assassination of bin Laden ended with the ringing reminder that in America we have "Justice for All." He said it with a straight face, and everybody waved their flags and felt good. It has to rank as one of the greatest political distractions of all time.
Good for New York. Hopefully a few more states will take notice (Are you reading this Greg Abbott?) and join the suit.
This type of action is long coming and should have been a priority when whole mortgage meltdown began several years ago. Many people have lost their homes to foreclosure during that time frame and finding out after the fact, that there was fraudulent mortgage practices involved isn't going to help them one bit.
Nice article. I agree with Larry above saying action should have been taken several years ago. Many people have suffered because of it and the time to take heavy action is now or better be soon.
Yes, my uncle was one of those unfortunates who lost his home to this type of foreclosure.
Nice article. Unfortunately most people do not know about the atrocities that the banks are committing. I have recently opened a business that is dedicated to fixing this. I sincerely hope that I can help people by informing them about what they can do. Usually going after the bank is good enough to scare them away, but recently they have begun making fraudulent documents as well. It's unfortunate that the higher ups in Goldman Sachs and other mortgage firms don't face any sort of prosecution for the millions that they have CRIMINALLY stolen from everyone. I know many people who have lost their homes and have had their bank accounts closed because of "new policies". It is quite infuriating.
Victims with such of foreclosure seem to increase in number in each every case. The question is who is going to stand up for all the victims?
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Michael Lewis' "The Big Short" is a great read on this subject.
Foreclosure left my friend and his family homeless.It was so painful,i felt for him
The World economy is heading towards a meltdown and property values will be an indicator of the situation.
Some where in the mix social factors need to be added to the equation and put in place to help Average Joe Survive all the Foreclosure drama.
Money is good stuff but I think a home over a families head is better.
What do you think Mano?
I don't feel that the banks are totally to blame for the mess. There is blame in the secondary market and Freedie and Fannie.
No matter how you slice it, it is unfortunate.
I just had a closing with a loan involving Bank of America and it was such a nightmare. I thought they were just inept, but now I think they purposely transfer you between representatives to delay and build more interest and attorney fees into the payoffs.