The Mortgage Meltdown
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|Peter Schroeder||April 28th 2012|
Roughly four years after the financial crisis hit, some on the left are wondering when, or even if, the Obama administration plans to pursue criminal prosecutions of the Wall Street figures that played a major role in the meltdown. Top White House officials, including the president himself, have vowed the slow, steady work of investigations is underway, and that those who broke the law on Wall Street will ultimately be held accountable. But despite those promises, there is scant public proof of progress, leaving some wondering how long it will take for the government to assign blame for the financial crisis.
"There's a little bit of mystification ... about just when and if the administration is going to do what it has said about the prosecutions," said Roger Hickey, co-director of the liberal Campaign for America's Future. "Many groups that are based in the Democratic Party just feel like they're getting the runaround." Many of those groups were heartened when the president announced in his January State of the Union address that he was establishing a team within the Department of Justice devoted specifically to rooting out wrongdoing in the housing market that precipitated the financial meltdown. "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 president told lawmakers.
Further driving hopes was the fact that Obama tapped New York Attorney General Eric Schneiderman, who had built a reputation recently as being particularly tough on the banking system, to lead the team. Since then, however, there has been little to publicly show for it.
Initially, the Justice Department announced the team would consist of “at least” 55 investigators, further driving concern that the president's announcement was more about garnering positive headlines than actually pursuing justice. “Almost four years after multi-trillion losses from the largest Wall Street-created financial collapse since the Great Depression and the crooks are still running free. That proves that the so-called mortgage fraud task force is a joke," said Dennis Kelleher, president and chief executive officer of Better Markets, a Wall Street reform group. "It is just PR spin by people who want to sound like they are doing something while doing almost nothing at all… If the President is serious, then he has to order the Department of Justice and the FBI to put hundreds of senior, experienced agents and prosecutors on the job,” Kelleher said.
Both Treasury Secretary Timothy Geithner and Obama himself have been pressed on when the public can expect to see criminal charges filed against some for their role in the meltdown. At an event in Oregon on Wednesday, Geithner was asked by an interviewer when Americans could expect to see "heads on plates." "The wheels of justice are turning now," he assured the audience. "They're not turning as fast as people would like, but we have the best justice system in the world for making sure we can enforce the laws of the land." In an interview with Rolling Stone, Obama faced a similar question -- when will the White House pursue charges against Wall Street giants for fraud and manipulation leading up to the collapse?
“There's still possibilities of criminal prosecutions,” he promised. “But what I've instructed the Attorney General to do is to follow the evidence and follow the law. That's how our system works.” Despite their vows, both men also indicated that while there may have been plenty that went wrong on Wall Street during the collapse, that does not mean it was all illegal. They hinted that the final product of a comprehensive investigation may be fewer criminal charges than many would like.
“We’re a nation of laws,” said Obama. “In some cases, really irresponsible practices that hurt a lot of people might not have been technically against the law. They might have been the wrong thing to do, but prosecutors are required to actually build cases based on what the law is.”
Geithner took things a step further, suggesting that it was primarily human nature, not criminal actions, that caused the crisis.
“Rarely is an actual crime a material source of the damage. This is a tragic thing. I wish it were different,” he said. “You cannot legislate away stupidity and risk-taking and greed and recklessness.”
Geithner’s remark set off some liberal groups, who saw it as evidence that the White House did not view the financial crisis as primarily a matter of criminal misdeeds. “When you have remarks like Geithner's…it makes you wonder why they've set up the task force in the first place,” said Hickey.
The White House, in conjunction with state attorneys general, did hammer out a $25 billion civil settlement with the nation’s largest banks in February. Under the agreement, the funds will be used to provide relief to homeowners hurt by widespread mortgage servicing problems, and Obama pointed out in his interview that that deal offered no criminal immunity to those involved.
Schneiderman testified before members of the House Progressive Caucus, where the work of his task force was met with similar scrutiny. He was presented with a letter signed by 42 House Democrats, where they aired concerns that the investigation had “stalled.” Echoing Obama and Geithner, he said that investigative work is underway, and promised that when it is all said and done, those who broke the law will have to answer to the government.
“On multiple fronts, we will continue to investigate the mortgage crisis that has devastated hardworking families in every corner of this country, and ensure that justice and accountability prevail,” he said.
Peter Schroeder writes for The Hill, from where this article is adapted.