Schneiderman Investigating Bain Capital, Amid No News of Any Investigation on Mortgage Fraud Task Force
As you may know, back in late January New York Attorney General Eric Schneiderman agreed to a relatively toothless settlement over mortgage servicing and foreclosure issues in exchange for becoming a co-chair of a task force designed to investigate and prosecute fraud in the securitization market. According to Schneiderman, this would focus resources on “the bubble and the crash,” the events that truly wrecked the economy, and both hold those who committed wrongdoing accountable and provide ongoing consumer relief to those who through no fault of their own found themselves suffering in the aftermath of the financial crisis.
Those were the key selling points of the task force, more formally known as the Residential Mortgage Backed Securities (RMBS) working group. In reality, the task force ended the split within the Democratic Attorney General ranks over the settlement, and created the conditions to finalize it. The goal was more political, to show that the Administration had an interest in accountability for the foreclosure crisis, and in ensuing months, to put on the board a big number of consumer relief that Your Government provided to homeowners. Never mind that the bulk of that relief, over 80%, has thus far consisted of short sales, which banks were already doing for a year prior to the settlement, and which results in the individual losing their home anyway. But that headline number sure looks good in the papers.
Meanwhile we’ve heard almost nothing about this RMBS working group. It took the group four months to hire a coordinator. And there’s ample evidence that the group merely takes credit for ongoing investigations that would have proceeded at their own pace. Nothing new has been generated so far. And what has Eric Schneiderman, a co-chair of this working group, been up to? Well, he’s issued subpoenas to banks over the unrelated Libor scandal. And he’s been very firm with the energy drink industry. But this latest foray is really unseemly, turning an apolitical law enforcement role into really just a political actor.