In his Sunday column in the NY Times, "
The Bipartisanship Racket," Frank Rich pulls no punches as he eviscerates
the just-announced "No Labels" organization, characterizing it as little more than a homogeneous, Wall Street-centrist group, akin to
"...a progressive high school's Model U.N., its heavy hitters are serious adults -- or at least white male adults."
Conveniently enough for yours truly, and as a byproduct of one of his best columns in awhile (IMHO), he manages to tie together much of what I've wanted to cover in multiple unpublished/unfinished diaries littering my computer desktop over the past month, as well.
Rich spends the first half of his lengthy column focusing upon the "No Labels" announcement, with statements, such as:
"The notion that civility and nominal bipartisanship would accomplish any of the heavy lifting required to rebuild America is childish magical thinking, and, worse, a mindless distraction from the real work before the nation."
But, it's in the second-half of his column where he really goes to town on the faux centrists. Not wanting to ruin it with my second-rate effort at parsing his perfect punditry (IMHO), I'm providing you with his three closing paragraphs. But, the link's at the top of this diary, if you want to bypass the blockquote, below...
The Bipartisanship Racket
By FRANK RICH
New York Times
December 18, 2010
...Our political leaders seem more inclined to hasten the next bust -- and perhaps cash in on it -- than prevent it. Massachusetts Republicans can't be blamed if they react with anger, not civility, to The Boston Globe's new revelations that Scott Brown raked in off-the-charts donations from the finance industry while toiling to weaken the financial regulatory bill. Democrats are equally entitled to be outraged that Obama's former budget director, Peter Orszag, has followed the egregious example of his mentor, Robert Rubin, by moving from the White House to a job at Citigroup -- and only four months after leaving government service.
As The Times reported, Citi is now marketing all-new lines of loosey-goosey credit cards to debt-prone Americans much as it stoked the proliferation of no-money-down mortgages during Rubin's tenure in the housing bubble. It can do so with impunity, since the incoming chairman of the House Financial Services Committee, Spencer Bachus, has already guaranteed institutions like Citi a pass. As Bachus's instantly notorious pronouncement had it, "My view is that Washington and the regulators are there to serve the banks."
In truth, this congressman's view has been the prevailing view in Washington under both parties since the Reagan administration. If No Labels is the best our centrist political establishment can come up with to address the ills eating away at America, its culture is as bankrupt as Citigroup would be if taxpayers had been allowed to let it fail.
# # #
He continues on to note that there's bipartisan anger on Main Street as the public becomes even more enlightened "...that both parties are bought off by special interests who game the system and stack it against the rest of us."
Rich nails it when he points out that America doesn't need "...another political organization with a toothless agenda and less-than-transparent finances. The country will not rest easy until there are brave leaders in both parties willing to reform the system that let perpetrators of the Great Recession escape while the rest of us got stuck with the wreckage.
Rich mocks the No Labels tagline: "Not Left. Not Right. Forward." Which, IMHO, is another way of saying, let's forget about all of the crimes that the status quo have perpetrated upon the middle and lower classes in the oligarchy's unrelenting efforts to stripmine Main Street.
And, it is here where I wish to focus upon some news of note that's appeared around the MSM and the blogosphere over the past week...
There are leading GOP'ers in the House of Representatives who have stated publicly, in just the past few days, that our nation's first line of defense against economic fraud, financial regulators and regulation--unless it's controlled by the industry it's supposed to regulate--is unnecessary:
On Friday, Republican Congressman Ron Paul stated on C-Span: "Ron Paul: `I Don't Think We Need Regulators,'" Wall Street Journal Blog, 12/17/10
On Monday, Meteor Blades told us how Alabama Rep. Spencer Bachus feels about banking regulators:
...nine-term Alabama Rep. Spencer Bachus, who takes over as chair of the House Financial Services Committee next month, has a message for us, too:
Bachus, in an interview Wednesday night, said he brings a "main street" perspective to the committee, as opposed to Wall Street.
"In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks," he said.
On Tuesday, I posted a diary about the initiative by our country's states' attorneys general to fully prosecute mortgage fraud on not just a civil basis, but on a criminal level, as well: 50-State Foreclosure Fraud AG: 'We will put people in jail.'
On Wednesday, we learned that Treasury Secretary Tim Geithner is blocking legal help for foreclosure fraud victims: "Geithner Blocking Legal Help For Foreclosure Victims," Zach Carter, Huffington Post, 12/15/10 . I also posted a diary about this on Thursday.
By Saturday, as Yves Smith notes--who's been on top of this story to the point where it won't surprise me if she gets some form of Pulitzer mention in 2011--in the following post, the matter was beginning to gain even more steam at the state level, particularly in Arizona and Nevada, two states hardest-hit by the mortgage meltdown...
# # #
(Note: Naked Capitalism Publisher Yves Smith has provided written authorization to the diarist to republish her blog's posts in their entirety for the benefit of the DKos community.)
Arizona, Nevada Sue Bank of America Over Mortgage Fraud While Treasury Sits on Its Hands
Yves Smith
Naked Capitalism
Saturday, December 18, 2010
The Administration's po-faced insincerity on the mortgage crisis front is wearing thin now that other authorities are taking action against the worst abuses.
Yesterday, we had the sorry spectacle of Treasury Secretary Timothy Geithner, under questioning by Congressional Oversight Panel commissioner Damon Silvers, maintain that the Treasury really had very little power to require banks to engage in certain types of behavior under the Treasury mortgage modification program, HAMP (see the testimony starting at 101). Silvers made it quite clear that he did not buy Geithner's claim. If you think I am reading more into Geithner's response than is warranted, he had a longer form discussion with a small group of bloggers last August and made a similar argument when asked why Treasury had done nothing when servicers were clearly gaming HAMP. I pointed out that there was a big difference between narrow authority and broad authority, and pointed out that Treasury had lots of leverage over banks, starting with REMIC violations. He pointedly ignored the REMIC issue.
So we now have the spectacle of two state attorney generals who see mortgage modification abuses large and persistent enough to warrant filing lawsuits against Bank of America. And both their press releases and media reports on the lawsuits (sadly, the filings themselves do not yet appear to be online) make clear that some of the alleged violations took place in connection with HAMP.
So why is Treasury playing what amounts to "see almost no evil, hear almost no evil, see almost no evil" as far as HAMP in particular and banks in general are concerned?
Geithner does acknowledge problems, then either plays them down or says that they are the result of other factors. For instance, the latest argument from the officialdom is that the high level of foreclosures is to a significant degree due to high unemployment. While that is narrowly accurate, it's also terribly convenient. It alleviates regulators like the Treasury of the obligation of looking how much servicer abuses such as erroneous application of payments and pyramiding junk fees are contributing to foreclosures. Similarly, high foreclosure rates also contribute to high unemployment. Foreclosures, particularly ones that could be avoided by doing a principal mod with a viable borrower, depress housing prices. Low and potentially falling housing prices impede housing sales generally, making it hard for homeowners to move if they get a job in another city. And a weak housing market has a general economy-depressing effect, which affects the job market. In other words, the causal link between unemployment and foreclosures is not one way.
So with Treasury having more than a bit of egg on its face with HAMP, with getting tough on banks a popular move, with the Administration in desperate need of courses of action to help boost the economy that don't require budgetary approval from the tight-fisted incoming Republicans in Congress, you'd think reining in the worst servicer abuses would be a no-brainer. Pick on the worst outliers, hope the rest of the industry gets the message, and if not, engage in another round of public executions. But that strategy would require a bit of backbone, a quality sorely lacking in the Obama Administration.
The lawsuits against Bank of America and its affiliates make a mockery of Treasury's passivity. They are broadly similar, both the result of investigations spurred by borrower complaints. The Arizona litigation, filed by Terry Goddard, charges Bank of America with consumer fraud as well as violation of a consent decree entered into in March 2009. The Nevada suit focuses on alleged deceptive practices in mortgage servicing, particularly in mortgage mods and foreclosures.
The statement of the Arizona AG Goddard says that the lawsuit seeks "restitution to eligible consumers and civil penalties, attorneys' fees, and costs of investigation to the State" as well as fines of as much as $25,000 for each violation of the 2009 consent decree and up to $10,000 per violation of the Arizona Consumer Fraud Act.
Both suits include a litany of complaints heard throughout the HAMP process: homeowners told they had to default when in fact current borrowers were eligible; borrowers under consideration for mods advised that their house would not be foreclosed upon when BofA was moving forward with the foreclosure process; falsely promising to take action on mod applications within a specific time period; telling consumers that their mods would be made permanent if they successfully completed the trial period, then denying the permanent mod and giving deceptive reasons for the turndown; incorrectly informing credit bureaus that borrowers had defaulted; engaging in bait and switch on mod terms.
The language in the press release was scathing: "misleading and deceiving consumers...callous disregard...truly egregious".
The New York Times story on the suits points out that the Arizona attorney general Goddard's term ends in January. The parallel filings, in two neighboring states that have among the highest foreclosure rates in the nation, will hopefully make it hard for his successor to back down (how can an incoming AG retreat from a case if the one in Nevada moves forward and garners favorable press? While AGs can and do kowtow to bankers, it will be harder to do so with the lights turned up this high).
These lawsuits also serve to keep pressure on Iowa attorney general Tom Miller, who is leading the 50 state AG probe. Although Bank of America may turn out to be the worst actor, newspaper reports on HAMP abuses have reported of similar dubious conduct by other major servicers, suggesting that additional banks should also be targeted once the litigation strategy is perfected on Bank of America.
Despite Miller's assurance that his group will seek criminal indictments where warranted, it isn't clear that MIller will be aggressive. I was concerned when I heard him speak positively about his dealing with Michael Barr of Treasury in the first Senate Banking Committee hearings on foreclosure abuses (as in it seemed sincere rather than pro forma). Those concerns have been further stoked by reports that Miller has said privately that he does not think the fraud is serious and he anticipates everything will be worked out.
Action on the state level is the best hope to rein in banking industry abuses. Hopefully observers will recognize that the actions of the Nevada and Arizona state attorneys general make a mockery of the Treasury's failure to seek redress and will also set a benchmark for possible measures against other banks.
Update: Here is the link to the Arizona complaint, hat tip Lisa Epstein. I've only skimmed it, but it has multiple references to commitments Bank of America made under the HAMP program, again raising the question of Treasury's failure to take action.
End of Naked Capitalism post.
# # #
Also in Sunday's NY Times, two very related stories...
...Gretchen Morgenson has an interesting piece (SEE: "Opening the Bag of Mortgage Tricks") that provides much insight into how even smaller civil litigation cases relating to mortgage investor fraud may have a significant impact upon the industry as a whole.
...Adam Liptak has a major lead story on the effect of the Roberts' (SCOTUS) court with regard to all of this...
Justices Offer Receptive Ear to Business Interests
By ADAM LIPTAK
New York Times
December 19, 2010 Page A1
WASHINGTON -- Almost 40 years ago, a Virginia lawyer named Lewis F. Powell Jr. warned that the nation's free enterprise system was under attack. He urged the U.S. Chamber of Commerce to assemble "a highly competent staff of lawyers" and retain outside counsel "of national standing and reputation" to appear before the Supreme Court and advance the interests of American business.
--SNIP--
The chamber now files briefs in most major business cases. The side it supported in the last term won 13 of 16 cases. Six of those were decided with a majority vote of five justices, and five of those decisions favored the chamber's side. One of the them was Citizens United, in which the chamber successfully urged the court to guarantee what it called "free corporate speech" by lifting restrictions on campaign spending.
The chamber's success rate is but one indication of the Roberts court's leanings on business issues. A new study, prepared for The New York Times by scholars at Northwestern University and the University of Chicago, analyzed some 1,450 decisions since 1953. It showed that the percentage of business cases on the Supreme Court docket has grown in the Roberts years, as has the percentage of cases won by business interests.
# # #
For decades, financial fraud -- in its various flavors, shapes and forms, whether it's in the mortgage banking or investment communities, at the credit ratings agencies, accounting or appraisal firms, or within our nation's legal practices and in the courts -- has run rampant throughout our society.
Here's blogger George Washington, with links to no less than nine of his posts, via a recent cross-post at Zero Hedge, telling us that until we prosecute fraud--where it matters, which is NOT at the lower echelons of the financial services industry for a paltry few billion dollars, as the DoJ lamely announced just a couple of weeks ago--we will never solve our country's financial problems:
The failure to prosecute fraud and the stubborn drive to prop up the too big to fail banks at all costs is what has prevented real action that would have helped stabilize the housing market. See this, this, this, this, this, this, this, this and this.
Apparently, as we've heard it once again over the past week, if the GOP and the Wall Street-owned faux centrists have their way, that will never happen. Then again, to be blunt about it, that hasn't happened on a national level, where the Democratic Party has (in theory if not in practice, anyway) controlled the narrative, for the past two years, either.
So, it is up to the states to do something about this now (providing their efforts are not beaten down in the Supreme Court), because even recent federal financial services legislation, and regulatory enforcement thereof, (to use a technical term) sucks. And, as we now see, firsthand, when push comes to shove, at the federal level, our elected officials and their minions are almost all faux centrists (or worse), regardless of party affiliation.
As Yves notes in a headline above (and as many have noted in recent weeks, months and years, in other stories that have managed to make their way into the blogosphere and the MSM), when it comes down to the important stuff, they all "sit on their hands"...to which I'll add: "...except when it comes time to count their own cash. "
IMHO, it is profoundly saddening that it is this fact which is the biggest "bipartisan" reality of all.