Tuesday, January 24, 2012

Whitewash Delayed is SOTU Spin Denied

Thanks to pressure from activists and a few stalwart attorneys general, President Obama has been denied the chance to belch out a major whopper at tonight's State of the Union address. It would have been a moment in which a whole chorus of "You Lies!" from the gallery would have been entirely appropriate.

Obama apparently had hoped to proclaim himself the middle class champion who went after the big bad banks to get a relatively paltry $20,000 slashed from each of the loans of a relatively small number of underwater homeowners  He was planning to spin a sweetheart deal with foreclosure fraudsters at five too-big-to-exist banks into a victory for the middle class.  And that would have been a major fib, because the money would have come not from the banksters themselves, but from pension funds containing bundled mortgage securities. It would have given to the middle class by taking from the middle class. The deal would not have sent one banker to jail, nor taken one nickel from the bloated bonuses of the likes of Jamie Dimon and Brian Moynihan.

The Obama Administration had summoned the state attorneys general to Chicago on Monday to try to persuade them to leave the criminals alone and to forget about extracting justice for their constitutents. From today's New York Times:

The housing secretary, Shaun Donovan, met on Monday in Chicago with Democratic attorneys general to iron out the remaining details and to persuade holdouts to agree with any eventual deal. He later held a conference call with Republican attorneys general. But as he renewed his efforts, Democrats in Congress, advocacy groups like MoveOn.org and several crucial attorneys general said the deal might be too lenient on the banks.....
Tom Miller, the attorney general of Iowa, said Monday that an agreement with the nation’s five largest mortgage servicers — Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Ally Financial — would not be reached “anytime this week.”
In a letter to administration officials, Senator Sherrod Brown of Ohio said the settlement as reported — its details were not fully known — was too small and would allow banks to pass on the cost of the settlement to “middle-class Americans” whose pension funds hold soured mortgage securities.
In addition to disagreements over the total amount, negotiations have been held up over the question of how much latitude authorities would have in pursuing investigations into mortgage abuses before the housing bubble burst in 2007. The banks are pushing for a broad release from future claims, but several attorneys general, including prominent figures like Eric Schneiderman of New York and Martha Coakley of Massachusetts, have demanded a tougher line on the banks.
A three-pronged pushback against the Administration from activists, legislators and the attorneys general created a major disruption of negotiations. The uproar, although relatively ignored by the mainstream press (The Times story was buried in the rubble of the GOP primary trainwreck) was reminiscent of the massive protest last week against SOPA/PIPA that had craven congress critters scampering for their burrows.

Naked Capitalism's Yves Smith, who has provided some of the best coverage on the background and details of this story, thinks the collapse in negotiations Monday may spell doom for any hope the banks and Obama  had for a whitewash  going forward -- ever.  Obama apparently was counting on the party bosses of the recalcitrant AGs putting pressure on them to fall into line. That didn't happen. The AGs in question didn't bother showing up at Chicage HQ. Writes Smith:
We will hopefully get more intelligence (or maybe just better attempts at disinformation) but I read this as an indication the deal agreed between the Federal regulators and the biggest servicers somehow came unglued. Possibilities include: someone exposed a definitional/drafting flaw (the Feds thought it meant one thing and the banks thought it meant another); someone (one of the banks?) retraded the deal; the Administration has assumed it could rely on a certain minimum number of AGs to fall in line and they regarded that minimum number as essential, and the pow wow today exposed that they are below that level.
The beauty of protest movements like this is that they act like magnets for the timid and uncommitted. Fighting back against the oligarchy has become chic -- and safe. People just couldn't get onboard the anti-foreclosure settlement train fast enough:

AFL-CIO President Rich Trumka said today “We call on the administration to reject any deal that insulates banks from full responsibility.” Bob Borosage of the Campaign for America’s Future said “This is a fundamental question of justice and democracy.  The law is respected only if it is enforced.  No one who robbed a bank would be offered immunity, a modest fine and no admission of guilt – before there was an investigation into who stole the money and how much they took.” The co-chairs of the Congressional Progressive Caucus, Keith Ellison and Raul Grijalva, said “It’s past time we stand up to Wall Street and show the American people that no bank executive is above the law."

In case you missed it, here is a clip of former New York Governor Eliot Spitzer on the foreclosure fraud background and White House involvement on Sunday's Up With Chris Hayes.

Have you got your bullshit detection meter charged up for tonight's State of the Union theater of the macabre?  Are we all fired up and ready to scream?  Digby says we should take a drink every time Obama says "frankly."  I, on the other hand, am now taking bets on how many times he will utter the word "folks."  My guess is an even two dozen. I'll have paper and pen handy, keeping score. 


Jay - Ottawa said...

These reports stun me anew each week. I refer to the enormous white-collar crimes, the quiet pardons that follow and the phony deals officialdom designs to sell the package as is. We are living in a vast con in which most of us are the marks. The surreal is not merely a weird art form when you discover it is your life and the state of the nation.

Whichever candidate eventually wins the Republican primary for the right, in the next round of debates, to trash Obama's record next fall will be the wrong person to do the trashing. Voters will still end up with a choice between two mud wrestlers. A write-in ballot, yes, but isn't that also surreal?

If only a fraction of the millions of people who lost their homes as a result of bank fraud and chicanery would occupy the streets around the Capitol tonight, the lions of finance and their pets in government would not sleep in that jungle tonight.

Denis Neville said...

Whitewash delayed, indeed.

Like SOPA/PIPA and Keystone, we shouldn’t celebrate. According to those pushing this settlement, issues are “still be resolved” and “this is one step along the way” and a “deal will be announced” at some point.

The key is how many state attorneys general will agree with it, or oppose it, and if public pressure against it is sustained.

Judicial Watch, the organization that investigates and fights government corruption, has filed a Freedom of Information lawsuit against the Obama Department of Justice (DOJ) and U.S. Department of Housing and Urban Development (HUD) to obtain documents pertaining to foreclosure fraud by these large banks and detailing the secret settlement negotiations.

“Foreclosure Fraud Reveals Structural & Legal Crisis,” Barry Ritholtz:
“The woes in the mortgage market are complex, deep and structural. This is more than just a few shortcuts taken by paralegals here and there — there are endemic structural problems within the US real estate and mortgage markets…We are not discussing economic problems of too many homes for sale and falling prices. What is being discussed here is a full blown crisis underlying home titles, foreclosure procedures, and securitized mortgages. The rampant, epidemic and systemic abuse of legal property protections is now reaching a crisis.”

“Why Foreclosure Fraud Is So Dangerous to Property Rights,” Barry Ritholtz

“Another Bad Bank/Housing Deal Coming Our Way,” Barry Ritholtz:

Denis Neville said...

“People never lie so much as after a hunt, during a war, or before an election.” - Otto von Bismarck

Jay Carney previewing President Obama’s State of the Union speech tonight: “The State of the Union will be about the central mission that we have as a country and his focus as president: Building a country and an economy where we reward hard work and responsibility, where everyone does their fair share, and where everyone is held accountable for what they do.”

Denis Neville said...

What constitutes a wasted vote? Choosing the lesser of two evils.

“And if this year’s election brings the wrong ideology to power, America’s nascent recovery might well be snuffed out.” – Paul Krugman, “Is Our Economy Healing?” NY Times, 1/22/12

This is the trick of the Obamabots and team Obama. Threaten us with what will happen if we choose to vote differently than how we are told to vote. They insist we need to vote for Obama, because the Republican choices will be so much worse.

Bruce A. Dixon, Black Agenda Report, “How To Waste Your Vote In 2012”

“A vote is a terrible thing to waste, they say. But exactly when are votes wasted? Are they thrown away when cast for the least of multiple evils. Are they squandered when cast for what people really need and want, even if that means a Democrat might not win? Are they lost when people with few or no good choices stay home? Or have voters already been robbed when the menu is limited to corporate-funded Republicans vs. corporate-funded Democrats?”


“Your vote really is your voice, and in the modern era, every government on earth claims to rule with the consent of the people. This bestows upon the vote a unique kind of legal and symbolic power. The gap, however, between this legal, this symbolic power of the vote and any real ability to change things for the better is a vast one. The authorities rightly fear the people's voice, and so have contrived law and custom to ensure that we are seldom heard and almost never heeded.”

“This imposition of false and meaningless choices is how, in these United States, our voices are suppressed, our votes wasted and made irrelevant, with the black vote rendered most irrelevant of all…

“This is how the game is played. This is how the legal and symbolic authority of millions of our wasted votes is hijacked every election cycle, making possible wars we do not endorse, ratifying policies we never wanted, and pretending to believe promises we know, or should know will never be kept. This is what Eugene Debs referred to a century ago, when he declared he would rather cast a meaningful vote for what did want, and not get it, than a fake and hollow one for what he didn't want, and get that.

“And so, a hundred years later, the game is still the game. If we want our votes to have any meaning, it's time to reject the fake choices between the two corporate parties. It's time to wise up, to grow up and like adults, to take a view longer than dessert, or the next two or three elections.”

Valerie said...

Well done, Karen.

It makes me sick how Obama is working on behalf of the banks at the expense of the rest of us and has the audacity to give speeches suggesting he is on the side of the Middle and Working classes. I really dislike the Republican candidates and all they stand for but for Obama to lie through his teeth while undermining us is equally reprehensible.

Of course, if the media would do its job and expose the truth about Obama's actions as opposed to what he says, the public might be able make responsible decisions when it comes to voting and taking part in our democracy. Thanks for being one of the few journalists getting the truth out there.

You know, it seems like Obama has taken a leaf from the Bush/Cheney model of governing - say it over and over again with conviction and do whatever the hell you want.

Jay is right - "We are living in a vast con in which most of us are the marks."