August 24, 2011 05:50 PM UTC

Too big to fail - too big to be held accountable

• 2 Comments
• by: allyncooper

“I believe that banking institutions are more dangerous to our liberties than standing armies.  If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and the corporations that grow up around the banks will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.”          Thomas Jefferson

“The banksters in effect issued their own currency in the form of collaterized debt obligations (CDO’s) which were ostensibly securitized by property.  As the foreclosures continue to roll, more  Americans everyday wake up with their property gone and homeless.    You can’t say we weren’t warned.”  

   allyncooper

Last fall in the wake of the “robo-signing “scandal and other egregious practices by big banks concerning foreclosure procedures, the same ones who were deemed “too big to fail” and got bailed out by the taxpayers, the attorneys generals from all 50 states and some federal agencies launched an investigation of the big mortgage servicers into the well documented faulty foreclosure procedures.  Predictably, some of the AG’s have been more aggressive than others (Colorado AG  John Suthers can be put in the “less aggressive” category, perhaps even as MIA)  in investigating and pursuing wrongdoing  in the  mortgage mess which is at the core of the countries housing meltdown.

It now looks like the Obama administration has joined ranks with those pushing for an agreement which would grant immunity and hold the big banks and servicers harmless from future liability and litigation in the mortgage mess.  And the incestuous relationship between the agencies charged with regulation and the banking industry is being exposed as well, with the agencies having clear conflict of interests in the matter.

Unfortunately, it looks like the interests of the big banks and servicers may prevail, flexing their economic and political power to stifle any accountability of their actions.

The state AG’s that have said no to any deal that gives the banks a “get out of jail” card are led by New York AG Eric T. Schneiderman and include Massachusett state AG  Martha Coakley  and some others. Schneiderman so far has held his ground saying “no deal” to a settlement that would let the five largest institutions involved –  Citigroup,  JP Morgan Chase, Wells Fargo, Ally Financial Inc., and the dirtiest of the dirty,  Bank of America – off the hook for future liability for a reported $20 billion settlement.  Sources also say the $20 billion would be structured for  loan modifications and principal reduction on existing mortgages,  so such a scenario would encompass the good, the bad, and mostly the ugly.

Bank of America spokesman Lawrence Grayson stated “We continue to believe the best way to get the housing market going again in every state is a global settlement that addresses these issues fairly, comprehensively, and with finality ” .  What a crock.  The reality is, the housing mess isn’t going to get any better with the “settlement” B of A and the other banksters desperately want.  It’s a slap on the wrist,  and a paltry sum to pay for the real gem handed to the banksters on a silver platter -immunity from any further investigations, civil liability, and potential criminal prosecutions.

The 50 state AG investigation was prompted by the “robo signing” scandal and other foreclosure “irregularities”by the banksters, which Connecticut AG Richard Blumenthal characterized as “at best careless negligence and at worst, outright fraud”.  But Schneiderman wants to enlarge the probes investigating Wall Street’s and the banksters role in the packaging and securitizing of risky mortgages, which was facilitated by the establishment of MERS (Mortgage Electronic Registration System) in 1995. Another issue to be investigated is the credit rating agencies issuing  AAA ratings on this junk.

State AG’s Martha Coakley  (Massachusetts.), Beau  Biden (Delaware), and recently California  AG Kamala Harris has expressed solidarity with Schneiderman’s desire to continue the investigations.  Harris has subpoenaed Citigroup, and its banking subsidiary Citibank to produce documents and answer questions about the selling and marketing of mortgage backed securities in California.

But that’s the last thing the banksters want.  Sources report  they are getting backup from the Obama administration pressuring Schneiderman ,  through HUD Secretary Shaun Donovan and high level Justice Department officials  (no surprise here, Eric Holder, the top federal law enforcement official has been “invisible ” in all this) – to accept a settlement that would release the banksters from all future liability in the biggest financial scandal ever that destroyed our economy.

Even the Fed is in on the coverup, with Kathryn S. Wylde, member of the board of the Federal Reserve Bank of New York and president of the Partnership for New York, a non profit organization of city business leaders stating to Schneiderman…..

“It is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our main Street – love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible”

Earth to Wylde.  How would you know they did something “indefensible” in the first place , when all investigations are squelched by the deal the banksters and the Obama administration are pushing?  Even though the real fraud occurred on Wall Street (the securitized financial instruments, the CDO’s, bogus credit ratings, etc.),  just move on folks, there’s nothing to see here.

Financial analyst  Barry Ritholtz had this to say on his The Big Picture website about the obvious conflicts in play…..

Note that the Federal Reserve (and indirectly, the NY Fed) are conflicted players in this. On the one hand, they are supposed to be bank regulators (a task they have performed poorly).  They are also substantial investors in the banks, and their regulatory oversight role is obviously conflicted.

There have been all manner of criminal and civil trespasses committed, and we should find out who ordered them, who committed them and why. AG Schneiderman should continue investigating the robo-signing, bring civil and criminal charges where necessary.

Recall that the original problems came about in large part due to Alan Greenspan’s Nonfeasance – the failure to perform his professional obligations of oversight and regulation. That any member of the Federal Reserve or NY Fed wants this closed before any investigation has been undertaken is a scandal of the highest magnitude.

The Obama administration , facing a tough re election battle in an anemic economy, has cast it’s lot with the banksters and corporatists. Evidently it’s better to coverup the festering wound and give those who should be held accountable get out of jail cards than hold them responsible. Scratching that wound during an election year is only going to make for a steady stream of bad news, and since “ignorance is bliss”, it’s  better to squelch the investigations and  just stay ignorant …..until the same players bring us down the next time.

Too big to fail….too big to be held accountable.   Welcome to the new Amerika.