We had to struggle with the old enemies of peace: business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.
They had begun to consider the government of the United States as a mere appendage to their own affairs. And we know now that government by organized money is just as dangerous as government by organized mob.
Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me and I welcome their hatred.
–Franklin Delano Roosevelt, 1936
The e-mail came from Patrick Madigan, a top lawyer in the Iowa Attorney General’s Office, on August 23. “Effective immediately,” it announced, “the New York Attorney General’s Office has been removed from the Executive Committee of the Robosigning multistate.” And just like that, Eric Schneiderman, the top law enforcement official in New York– the state where Wall Street is situated–was kicked off the nationwide committee of state law enforcement officials investigating Wall Street fraud.
In a sane society, Attorneys General would show themselves unfit for such a committee by exhibiting too close a relationship to the subjects of the inquiry. In this one, the opposite was true: Schneiderman has too upstanding a record as a corruption-gadfly for the establishment’s comfort. In the New York State Senate, Schneiderman took on the culture of corruption in Albany, passing tough ethics reform measures while campaigning for even tougher ones. This led him to do some kicking out of his own, when he chaired the committee to eject a crooked senator for the first time in modern history, and won unanimous support, at a time when political divides between Democrats and Republicans had essentially thrust Albany into gridlock, for a measure adding tax fraud to New York’s whistle-blower law, hailed as America’s strongest law to root out fraud against taxpayers (and Schneiderman, now Attorney General, at last finds himself in a position to use that law).
The White House brazenly collaborated with big banks to lobby to remove Schneiderman from the foreclosure abuse probe committee, thereby dispelling any lingering questions about which side the President is on.
That any such questions should linger is itself mysterious. The public has had a long time to come to terms with Obama’s allegiances to Wall Street’s profit interests, the earliest indications having come in the form of his appointments of Larry Summers and Rahm Emmanuel to top administration posts.
Summers was one of the chief Wall Street operators who spent his late 1990’s blocking the regulation of precisely the financial derivatives market that threw the global financial system into crisis and obliterated the US economy. The intervening decade between that lobbying and his nomination as Obama’s top economic advisor produced anything but a cooling of relations between Summers and Wall Street tycoons. As late as April of 2008, when Summers was already a shoe-in for his government role, Goldman-Sachs was paying him $135,000 for a one-day speaking appearance. Indeed, eight days after Obama was elected President, Merrill Lynch paid Summers $45,000 for a similar event. All told, Summers took in roughly $8 million from hedge funds and financial institutions in the year before he moved to DC. To whom can we expect he owed his services while there?
Rahm Emanuel was never a Wall Street guy himself, but he was certainly Wall Street’s guy in Washington, first finding himself receiving $3,000 per month from Goldman Sachs to “introduce us to people,” then raising funds from Wall Street firms for Bill Clinton’s 1992 presidential campaign and later on shepherding the $700 billion financial bailout through the House caucus he helped lead in 2008. (Readers may recall that Emanuel’s successor was former JP Morgan Chase & Co. executive Bill Daley, and Summers’ was Gene Sperling, another Goldman Sachs alum.)
Figures who have worked their way up to prominence by displaying fealty to the financial behemoths that defrauded and later extorted America for outrageous windfall profits are just the type President Obama is fond of promoting. The banks have noticed and shown proper gratitude, taking Obama’s stooges on board the minute they’ve decided this whole “public service” charade just isn’t for them any longer. Obama’s erstwhile budget director, Peter Orszag, for example, cashed out by moving over to Citigroup and Obama’s former chief council, Greg Craig, is now at Goldman-Sachs. This is the conduct of a President whose campaign promise was to “close the revolving door between K Street and the executive branch.”
It’s not just personnel, but bank-friendly policies as well, which Obama’s apologists are eager to chalk up to pressure lain upon him by a powerful and recalcitrant GOP, but really this is preposterous. When Obama champions a financial regulation reform bill that, according to Tim Carney, provides “stricter federal liquidity and capital requirements” which, in effect, “[reduces] the risk that Goldman’s debtors of insurers will run into trouble,” no reasonable onlooker could posit that the people he appointed to surround him gave him contrary advice. Summers and his friends lobby for laws that would endanger Goldman’s bottom line? Please. This arrangement is what Summers wanted and what the President asked for when he appointed Summers – the GOP barely figures in. (It’s worth noting that the most salient appointments, Summers and Emanuel included, happened under no GOP pressure at all, not least because Obama made them when Democrats controlled considerable majorities in both houses of Congress).
As the corrupt get rewarded, the honest get rebuked. Unlike the President, Schneiderman is about the very business he promised to take up, investigating bank abuse with earnestness and rigor. His chief transgression has been declining the Obama Administration’s instructions to drop his opposition to a proposed settlement deal. Matt Taibbi depicts the deal thus:
The idea behind this federally-guided “settlement” is to concentrate and centralize all the legal exposure accrued by this generation of grotesque banker corruption in one place, put one single price tag on it that everyone can live with, and then stuff the details into a titanium canister before shooting it into deep space.
This is all about protecting the banks from future enforcement actions on both the civil and criminal sides. The plan is to provide year-after-year, repeat-offending banks like Bank of America with cost certainty… and will also get to know for sure that there are no more criminal investigations in the pipeline.
The proposed settlement amount is $20 billion, which may sound like a lot, but really is Chump Change We Can Believe In. For context Robert Scheer notes,
The banks were given direct cash subsidies, virtually zero-interest loans, and the Fed took $2 trillion in bad paper off their hands while the banks exacerbated the banking crisis they had created through additional shady practices, including fraudulent mortgage foreclosures.
Not only doesn’t the fee match the governments’ favors, but it also pales in comparison to the banks’ offense. Taibbi again:
To give you an indication of how absurdly small a number even $20 billion is relative to the sums of money the banks made unloading worthless crap subprime assets on foreigners, pension funds and other unsuspecting suckers around the world, consider this: in 2008 alone, the state pension fund of Florida, all by itself, lost more than three times that amount ($62 billion) thanks in significant part to investments in these deadly MBS.
Some deal. Charge the banks a pittance and promise them none of them will get in trouble for any of the manifold abuses they’ve perpetrated against Americans, who once again are forced to take it on the chin while the fat cats swim in their ill-gotten loot. For his resistance to this deal, Schneiderman got the axe.
Can anyone remember a Republican the Obama Administration has treated this way? Obama’s modus operandi with the GOP is typically to adopt a cajole-and-mollify strategy, taking meeting after meeting and saying all the nicest words before giving in entirely. With Schneiderman, Obama decided instead to deploy Secretary of Housing and Urban Development Shaun Donovan for what the New York Times called “an intensifying campaign to try to persuade the attorney general to support the settlement.” Donovan was, per the Times’ earlier reporting, “a managing director at Prudential Mortgage Capital Co., in charge of its portfolio of investments in affordable housing loans, including Fannie Mae and the Federal Housing Administration debt.” Figures.
All this is part and parcel of Obama’s strict attitude of bank protection. He’s the anti-Roosevelt. Not only doesn’t Obama welcome their hatred, he punishes their scrutiny. Luckily for the 14.6 million homeowners who owe $753 billion more on their mortgages than their homes are worth, Eric Schneiderman is not afraid of punishment. And so the scrutiny continues.