Obama to Investigate Wall Street Role in Economic Collapse
After Years of Inaction, Obama Moves to Investigate Wall Street Role in Economic Collapse
The film, "Inside Job," which investigated the causes of the U.S. and global economic meltdown. won the Academy Award for best documentary film in 2011. Upon accepting his Oscar at the awards ceremony, the film's director, Charles Ferguson, decried the fact that three years after the financial crisis caused by financial fraud, not a single financial executive had gone to jail. Nearly a year later, and five months after the birth of the Occupy Wall Street movement, President Barack Obama announced in his January State of the Union address that he was appointing New York State Attorney General Eric Schneiderman as one of five co-chairs of a new Justice Department task force to investigate mortgage fraud by big banks and financial institutions that played a central role in the economic collapse.
Earlier, Schneiderman had resisted signing onto a proposed 50-state deal promoted by the Obama administration that would have brokered a commitment from the nation’s five largest banks to pay $25 billion in relief to present and former homeowners for mortgage robo-signing abuses, in exchange for immunity from all prosecution for the bank’s illegal conduct that contributed to the economic failure in 2008. Schneiderman’s resistance to the Obama offer of immunity deal could in the end result in a settlement mandating more accountability from big banks.
Independently of other states, Schneiderman launched lawsuits on Feb. 3 against Bank of America, JP Morgan Chase and Wells Fargo for their deceptive and fraudulent use of a shell company, the Mortgage Electronic Registration Systems, or MERS, used to register mortgage loan ownership. Between The Lines’ Scott Harris spoke with Richard Eskow, a senior fellow with the Campaign for America’s Future, who discusses the nation’s shifting political climate that has caused the Obama administration to take a tougher stand in holding Wall Street accountable for mortgage fraud that led to the nation’s economic collapse.
RICHARD ESKOW: Look, we have a situation where the president was elected at a historic moment with a historic mandate to force real change on Wall Street and to hold criminals accountable, to track them down and hold them accountable. He didn't do that. That's a historic disappointment. I feel that's a terrible thing that he acted the way he did for whatever reason. And the Justice Department's record of non-prosecution of bankers, even in cases where the evidence seemed overwhelming is extraordinarily disappointing and even shameful.
But I think a couple of things happened to change the dynamic. One was Occupy Wall Street. The energy that got Barack Obama elected in 2008 was first of all, totally dissipated away from him as we saw in the 2010 election. Young people voted in lower numbers in 2010 than they did in 2006, before most of them had heard of Barack Obama. So, that energy went away from him, and a lot of it was galvanized by Occupy Wall Street, either directly or by the emotions and feelings that Occupy generated and the change in the debate to economic fairness.
So, the president recognizes that. And, I think he and his advisers realize that they can't pretend – he stopped saying what I think is one of the worst things, least credible things he's ever said. He had this standard line, speech line, "Main Street and Wall Street rise and fall together." That's just flatly not true, number one. So he realizes he has to do something. And he realizes now the level of public outrage that bank crimes have not been prosecuted.
So now, in the meantime, the statute of limitations may have run out on some crimes and so, but until a couple of weeks ago, he had been pushing yet another cushy deal with the banks – because we've had a lot during his administration as well as the Bush administration – where they could write a small check, relatively speaking, to get away from big crimes. Now, he realizes because Eric Schneiderman in New York, where a lot of the big banks are headquartered and Kamala D. Harris in California wouldn't sign onto the deal, he realized had to deal with them. He realized he was dealing with a different national mood. A lot of activist groups trying to keep the pressure on.
So, I think now he's trying to weave his way through placating the banks on the one hand – because he does get elected in a system where corporate money drives elections. So I think he's dealing with that on the one side and on the other, public outrage, and I think it's the job of the public to keep the pressure on the president and other politicians to make sure justice is served.
You know, while there's the lawsuit from the state of New York, we also need to know the criminal investigations will be made, and the individual bankers who committed crimes will be prosecuted. More than 1,000 big bankers went to jail after the savings and loan scandal, which was a tiny fraction of the scope of what went on in this decade.
BETWEEN THE LINES: Richard, what do you think of Eric Schneiderman as co-chair here? He has certainly fought for preventing the banks from getting a free pass in the mortgage fraud investigations that were ongoing of the many states' attorney generals. Do you think him being one of several co-chairs of this new unit at the Justice Department will make a difference in holding accountable the big banks?
RICHARD ESKOW: I think he's done a great job up to now, and he's been a hero. And I think he's a co-chair with several other people whose records have been terrible. So, with the enforcement officer at the FCC that keeps letting the banks off, with the guy at the Justice Department who's sleeping on the job and who went on 60 Minutes and said, "What they did was wrong, but not illegal," which is demonstrably untrue; there's no reason right now not to think Schneiderman, who just the other day initiated that lawsuit – is not fighting on the side of the angels. So that's what I'm going to assume unless I hear otherwise.
BETWEEN THE LINES: Big banks and Wall Street firms have so much money and so much power and influence in Washington and state capitals that a lot of people are cynical that we can really change the structure here. There's the view of many that we have a permanent secret government that pulls all the strings and the parties are really just so much superficial fluff, that the real power behind the White House and Congress are these huge banks and financial institutions. How do you think we can overcome that?
RICHARD ESKOW: One way to diminish the banks' power is by making it clear to at least one party that they can't have it both ways. Another way is to push for a constitutional amendment or some other way to get money out of politics, because right now we have a system of corporate politics, plain and simple.
You know, don't despair. I mean, I think the cynicism is the most destructive thing we can do. If we're convinced that the banks have already won, then we won't fight. The public has a lot more power than it realizes. But, you know, I think the idea is we've got to be prepared to do what it takes to fight this banking and corporate government system and be really strong: "I'm nonviolent; but strong about it," saying, "If we have to take it to the streets, we'll go into the streets." Because otherwise, they do win.
For more information about Campaign for America's Future, visit OurFuture.org.