Here we go again! A commission. The politician's way of seeming to do something, though really doing nothing, all the while defusing criticism and dispersing risk. *
Three years late and stunted politically at its very inception, this year's version of a Truth and Reconciliation Commission will likely do little to uncover any truths which we don't already know and reconcile nothing that would not have been reconciled in any event without a commission.
Let's take a close look at the new special investigations unit, already being dubbed the Mortgage Crisis Commission.
- Marching Orders
- The Players
- Predators and Prey
- Quis custodiet ipsos custodes?
The following 'marching orders' are from President Obama's State of the Union Address 2012, given on January 24, 2012:
"And if you're a mortgage lender or a payday lender or a credit card company, the days of signing people up for products they can't afford with confusing forms and deceptive practices are over."
"And tonight, I am asking my Attorney General to create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans."
The "special unit" mentioned by the President is an office of Mortgage Origination and Securitization Abuses. Special units don't have Chairpersons, but this one does. So, let's just stick to the word "commission" for the time being. Its chairman is to be Eric Schneiderman, the Attorney General of New York. This investigation unit is to be part of the Financial Fraud Enforcement Task Force.
In addition to Eric Schneiderman, the commission will be co-chaired by Lanny Breuer, Assistant Attorney General at the Criminal Division of the Department of Justice; Robert Khuzami, the SEC's Director of Enforcement; John Walsh, the U. S. Attorney in Colorado; and Tony West, the Assistant Attorney General of the DOJ's Civil Division.
According to the White House, "the goal of this joint investigation will be threefold: to hold accountable any institutions that violated the law; to compensate victims and help provide relief for homeowners struggling from the collapse of the housing market, caused in part by this wrongdoing; and to help us finally turn the page on this destructive period in our nation's history."
Eric Schneiderman has been developing a reputation as a fighter against tax cheaters. More to the point, he has been opposing a bank foreclosure deal - which has been strongly backed by the Obama Administration - arguing that the settlement would place a limit on investigating wrongdoing on the part of banks. He has come under intense pressure from the Administration and its functionaries, such as Shawn Donovan of HUD, and many Attorneys General, to support the settlement. In fact, Mr. Schneiderman was kicked off the AGs' negotiating committee. The big stumbling block in the settlement has been that, in exchange for the banks' agreeing to a settlement, the Attorneys General who are participating in the settlement would have to agree to sign broad releases preventing them from bringing further litigation on matters relating to improper bank practices. The price tag was $20 billion.
Interestingly, quite recently there has been news about a potential settlement after all. Under this proposed settlement, banks would agree to follow existing laws against abusive foreclosures and set aside $25 billion to help homeowners who are underwater on their homes or who were wrongfully foreclosed. We still need to learn the full details regarding the level of legal immunity granted to banks accused of wrongdoing as well as the scope of violations covered by the settlement.
The cynical amongst us might think that AG Schneiderman has held out long enough against mighty Administration pressure and has been offered now some national prominence by being named the Chairman of this commission. After all, Mr. Schneiderman sat near First Lady Michelle Obama at the State of the Union speech and he issued the following statement: "I would like to thank President Obama for his leadership in the creation of a coordinated investigation that marshals state and federal resources to bring justice for the victims of the misconduct that caused the mortgage crisis."