Eric Schneiderman Challenges Obama Administration Over Mortgage Investigations
Posted: 04/24/2013 7:34 am EDT | Updated: 04/24/2013 7:30 pm EDT
New York’s top prosecutor is co-chair of the administration’s year-old Residential Mortgage Backed Securities Working Group, an initiative that President Barack Obama called for in his State of the Union address last year. In a sign of Schneiderman’s importance to the group, the White House seated him behind Michelle Obama during the speech.
Schneiderman, a Democrat who has attempted to investigate Wall Street, expressed his frustrations with the administration earlier this month during private meetings with Democratic senators on Capitol Hill, arguing that he was “naive” when he first entered into the partnership with the Justice Department, lawmakers and their aides said.
Critics of Schneiderman's collaboration, which came in exchange for his assent to a national mortgage settlement, warned at the time that the attorney general was being played. His recent criticisms of the administration may renew allegations that he, too, has compiled a lackluster enforcement record.
Schneiderman has recently directed his attention to working with lawmakers and outside groups to pressure the administration to toughen its approach. He traveled to Washington for meetings with Sens. Elizabeth Warren (D-Mass.), Carl Levin (D-Mich.), Sherrod Brown (D-Ohio) and Jeff Merkley (D-Ore.), among others, according to people who attended the meetings. The four senators have been among the loudest critics of the Obama administration's efforts to hold the financial industry accountable for alleged wrongdoing, charging they have not gone far enough.
Examples of criticized settlements include the Justice Department's decision not to file criminal charges against financial companies accused of manipulating benchmark interest rates, as well as banks alleged to have helped drug cartels launder money through the U.S. financial system. Government panels like the Financial Crisis Inquiry Commission and the Levin-chaired Permanent Subcommittee on Investigations that referred cases for potential prosecution have seen their recommendations cast aside.
Schneiderman excoriated Justice Department officials for their approach in targeting wrongdoing by financial institutions in private meetings with lawmakers.
“He expressed similar frustrations that the public has expressed,” Levin said.
Levin said that Schneiderman argued that the Justice Department lacks the “political will” to forge ahead with prosecutions of high-ranking financial executives and large financial groups.
“There's been a real lack of going after the top folks, in general,” Levin said. His subcommittee has aggressively probed potential wrongdoing by leading financial institutions, including alleged money laundering at HSBC and mortgage-related misdeeds at Goldman Sachs.
Another senator, who requested anonymity, said of Schneiderman that it's “very clear he's extremely frustrated."
Schneiderman’s behind-the-scenes criticism may sting administration and enforcement officials, who for years have been dogged by allegations that they have been soft on Wall Street.
The White House attempted to rebut those accusations in part by giving Schneiderman a plum role on a unit launched with great fanfare. He was promised aggressive prosecutors and investigators who through enforcement action would put to rest allegations that the Obama administration has been lax on pre-financial crisis misconduct.
The Justice Department has promoted four cases as having been brought thanks to the securitization task force: two separate settlements reached between the Securities and Exchange Commission and JPMorgan Chase and Credit Suisse, and two civil cases Schneiderman has brought in state court against those same banks.
The SEC’s settlements ended investigations that began long before the formation of the securitization task force.
Critics allege the task force has racked up an unimpressive record. In a sign of its decreased standing at the White House, Obama did not mention it in his State of the Union address earlier this year.
“No one is happy with the pace of the task force at all. It's a travesty,” said Brian Kettenring, a community organizer who runs the advocacy groups Leadership Center for the Common Good and Campaign for a Fair Settlement. “It’s one of the biggest black marks on this administration, in terms of what they promised versus what has happened.”
Michael Bresnick, executive director of the Obama-formed Financial Fraud Enforcement Task Force, an oft-criticized collection of regulators that has spent much of its time targeting low-level mortgage brokers and borrowers, said last month the RMBS group is “actively investigating fraud” related to mortgage securities.
More than 200 people from the working group are currently investigating potential misconduct in mortgage securities, the Justice Department said.
“Many more investigations are ongoing,” Bresnick said.
Part of the administration’s embrace of Schneiderman was guided by his appeal to liberal groups, who view him as the new sheriff of Wall Street and have criticized the administration’s approach to alleged misconduct by big banks.
Schneiderman often describes how he is holding Wall Street accountable during private meetings with key interest groups, participants in the meetings have said. His office has demanded various internal bank documents on activity ranging from alleged attempts to manipulate benchmark interest rates to the pre-financial crisis securitizations of home loans that eventually defaulted.
New York’s top law enforcement officer also has the two pending civil cases against Credit Suisse and JPMorgan Chase for allegedly misleading investors in mortgage bonds. Both banks have disputed the allegations.
Schneiderman relied on the Justice Department to bring those two cases, officials said. The agency and several U.S. Attorney’s Offices combined to interview more than 40 people and provided more than a dozen analysts and attorneys to review documents for Schneiderman’s lawsuits, officials said.
“The sharing of information and expertise has been certainly beyond anything I've ever seen or been aware of," Schneiderman said when he announced his JPMorgan lawsuit in October. "It has enabled us to move forward more quickly and more aggressively than we would have.”
Justice spokeswoman Adora Andy Jenkins said the agency “supplied and continues to supply crucial investigative and litigation support, technological resources, and expertise to these cases.”
In the months after Schneiderman took office in 2011, large financial institutions and their lawyers said they feared him. Now, some have said privately in interviews that they view him as a nuisance, given the dearth of cases he has brought in light of his aggressive requests for documents.
Instead, another New York state regulator who is viewed as a rival, Superintendent of Financial Services Benjamin Lawsky, has emerged as the key Wall Street scourge, earning the enmity of some industry executives for his enforcement activities and willingness to buck federal regulators.
In his most notable case, Lawsky secured $340 million from Standard Chartered, a UK bank, to settle accusations the bank hid key details from regulators involving at least $250 billion in illicit transactions with Iran and potentially violated U.S. sanctions policy.
At the time of the settlement, Levin, the powerful chairman of the Senate's investigations panel, said that Lawsky and his team "showed that holding a bank accountable for past misconduct doesn’t need to take years of negotiation over the size of the penalty; it simply requires a regulator with backbone to act.”
Members of advocacy groups who have met with Schneiderman have expressed disappointment in his own efforts to hold financial institutions accountable, and question his criticisms of the administration. Those who spoke on the condition of anonymity for fear of jeopardizing their relationships with his office described Schneiderman’s rhetoric as far more aggressive than his investigations.
"Millions of households are still reeling from the mortgage crisis, which continues to be a drag on our economic recovery," said Schneiderman spokesman Damien LaVera in response.
“The attorney general ... is working constructively with the Justice Department ... [and] will continue to work on multiple fronts with activists and allies inside and outside the government to find aggressive, creative ways to ensure that struggling homeowners in New York and around the country get the relief they deserve,” LaVera added.
Schneiderman maintains the backing of some liberal groups, in part because of his efforts to convince the White House to fire Edward DeMarco, the government regulator overseeing state-controlled mortgage giants Fannie Mae and Freddie Mac.
Some of these groups have been critical of DeMarco, the acting head of the Federal Housing Finance Agency, for his refusal to allow the mortgage companies to forgive distressed borrowers’ mortgage debt. Earlier this year Schneiderman prepared a memo outlining a potential way in which the White House could replace DeMarco.
Roman Catholic Easter Sunday in preference to Greek Orthodox Easter Sunday. Is it any wonder that NY is bankrupt and its OTBs going bankrupt one after the other? See NY PML Sec 109 and NY Const. Art. 1, Sec. 3 etc. You might think that one as yet unidicted NY official with standing would avail themselves of a FREE formal or informal opinion from NY Attorney General Eric Schneiderman.
See below
Letter: Why close racetrack on Palm Sunday?
Photo credit: AP | In this photo provided by New
York Racing Association, Stay Thirsty, left, with Ramon Dominguez
aboard, captures The G1 Cigar Mile horse race at Aqueduct in New York.
(Nov. 24, 2012)
To see what's wrong up in Albany, one only
needs to look at the fact that the Aqueduct Racetrack was closed on
Palm Sunday. On an average Sunday, The Big A has a total handle of
between $6 million and $7 million, of which New York
State takes a percentage.Racing also injects money into the industry, paying jockeys, trainers, grooms, etc. Hundreds of employees -- pari-mutuel clerks and racing officials -- help put on the show, which the state gets a piece of in income taxes.
All of this, worth thousands upon thousands of dollars, was lost because on an antiquated law. Not being allowed to race on Christmas or Easter is OK, but Palm Sunday? The New York Racing Authority races on Thanksgiving, and that's a holiday that the vast majority of us celebrate.
Changing this law would be a slam-dunk revenue creator.
Gerard Bringmann, Patchogue
Editor's note: The writer is both a racing fan and a practicing Catholic.
OPEN ON 1ST PALM SUNDAY, OTB RAKES IN $2M - NY Daily News
www.nydailynews.com/.../open-1st-palm-sunday-otb-rakes-2m-articl...
OPEN ON 1ST PALM SUNDAY, OTB RAKES
IN $2M. By Jerry Bossert / NEW YORK DAILY NEWS. Monday, April
14, 2003, 12:00 AM. Print · Print; Comment ...OTB FACES HAND SLAP OVER PALM - NY Daily News
www.nydailynews.com/.../otb-faces-hand-slap-palm-article-1.667233
Apr 16, 2003 – By Jerry Bossert
/ NEW YORK DAILY NEWS ... Aqueduct was also closed on Palm
Sunday, but OTB thrived on action from around the
country.
HI-
Thanks for the help. The item’s
below. I’d be happy to mail you a copy, if you give me a mailing
address.
Claude
Solnik
(631)
913-4244
Long Island Business
News
2150
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LI Confidential
> Stop scratching on holidays
Stop scratching on holidays
Published: June 1, 2012
Off Track Betting in New York State has been racing into a crisis called shrinking revenue. Some people have spitballed a solution: Don’t close on holidays.
New York State Racing Law bars racing on Christmas, Easter and Palm Sunday, and the state has ruled OTBs can’t handle action on those days, even though they could easily broadcast races from out of state.
“You should be able to bet whenever you want,” said Jackson Leeds, a Nassau OTB employee who makes an occasional bet. He added some irrefutable logic: “How is the business going to make money if you’re not open to take people’s bets?”
Elias Tsekerides, president of the Federation of Hellenic Societies of Greater New York, said OTB is open on Greek Orthodox Easter and Palm Sunday.
“I don’t want discrimination,” Tsekerides said. “They close for the Catholics, but open for the Greek Orthodox? It’s either open for all or not open.”
OTB officials have said they lose millions by closing on Palm Sunday alone, with tracks such as Gulfstream, Santa Anita, Turf Paradise and Hawthorne running.
One option: OTBs could just stay open and face the consequences. New York City OTB did just that back in 2003. The handle was about $1.5 million – and OTB was fined $5,000.
Easy money.
