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This is an Open Thread
Apr 20 2012
Apr 20 2012
85 days and counting since President Obama announced in his State of the Union speech the formation of the Residential Mortgage Backed Securities Working Group (RMBS) co-chaired by NY State Attorney General Eric Schneiderman and it is still a toothless entity that has so office space, phones and has yet to be staffed. The New york Daily News noticed, suggesting that Schneiderman should quit this fraud:
[..]calls to the Justice Department’s switchboard requesting to be connected with the working group produced the answer, “I really don’t know where to send you.” After being transferred to the attorney general’s office and asking for a phone number for the working group, the answer was, “I’m not aware of one.”
The promises of the President have led to little or no concrete action.
In fact, the new Residential Mortgage Backed Securities Working Group was the sixth such entity formed since the start of the financial crisis in 2009. The grand total of staff working for all of the previous five groups was one, according to a surprised Schneiderman. In Washington, where staffs grow like cherry blossoms, this is a remarkable occurrence.
We are led to conclude that Donovan was right. The settlement and working group – taken together – were a coup: a public relations coup for the White House and the banks. The media hailed the resolution for a few days and then turned their attention to other topics and controversies.
But for 12 million American homeowners, collectively $700 billion under water, this was just another in a long series of sham transactions.
Schneiderman, who has acted boldly and honorably, should distance himself from this cynical arrangement. He should resign and go back to working effectively with fellow attorneys general in Delaware, Massachusetts and Nevada.
They are much more likely to create the kind of culture of accountability in the financial community that will protect U.S. families from the next real estate scam.
According to a Reuter’s report, the office space has been located:
The task force includes the Justice Department, the SEC, the FBI and the Department of Housing and Urban Development, among others. It is charged with investigating the pooling and sale of home loans that contributed to the financial crisis.
While the group faced some skepticism, considering the crisis began nearly five years ago, there are signs it is serious about bringing cases.
The co-chairs meet formally every week and talk almost every day to coordinate on “a range of investigations,” a Justice Department official said, on condition of anonymity.
About 50 staff members are working on the effort, and the task force has identified separate office space in Washington and will move some personnel there, the official said.
The Justice Department last month posted a one-year position of full-time coordinator for the working group who could help manage discovery and coordinate investigations, according to the job posting.
Yves Smith at naked capitalism agrees that Schneiderman has been had by the Obama administration:
It was pretty obvious Schneiderman had been had. Obama tellingly did not mention his name in the SOTU. Schneiderman was only a co-chairman of the effort and would still stay on in his day job as state AG, begging the question of how much time he would be able to spend on the task force. His co-chairman is Lanny Breuer from the missing-in-action Department of Justice. And most important, no one on the committee was head of an agency, again demonstrating that this wasn’t a top Administration priority.
However, she disagrees with the Daily News assessment of Schniederman acting “boldly and honorably” and that he can go back to working with the other attorneys general:
Schneiderman’s actions were neither bold nor honorable. Not surprisingly, his effort at a star turn in the national media has not led to favorable poll results for him in New York. And the Daily News offers a fantasy as an alternative. There is no “going back.” The attorneys general gave up their best legal theories, and with it, their ability to protect the integrity of title, for grossly inadequate compensation and a photo opportunity.
It would be better if we were proven wrong, but Schneiderman entered into an obvious Faustian pact. He’s not getting his soul or his reputation back.
Meanwhile as reported by Think Progress,
A recent report showed that mortgage foreclosure scams have spiked 60 percent in 2012, while the nation’s biggest banks continue to sit upon a slew of fraudulent mortgage documents. A recent investigation of foreclosures in San Francisco found that nearly all of them had legal problems or suspicious documents, prompting the city council to suggest a foreclosure moratorium.
Apr 20 2012
This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.
Find the past “On This Day in History” here.
April 20 is the 110th day of the year (111th in leap years) in the Gregorian calendar. There are 255 days remaining until the end of the year.
“Strange Fruit” was written by the teacher Abel Meeropol as a poem, it condemned American racism, particularly the lynching of African Americans. Such lynchings had occurred chiefly in the South but also in all other regions of the United States. He set it to music and with his wife and the singer Laura Duncan, performed it as a protest song in New York venues, including Madison Square Garden.
The song has been covered by numerous artists, as well as inspiring novels, other poems and other creative works. In 1978 Holiday’s version of the song was inducted into the Grammy Hall of Fame. It was also included in the list of Songs of the Century, by the Recording Industry of America and the National Endowment for the Arts.
In the poem, Meeropol expressed his horror at lynchings, possibly after having seen Lawrence Beitler‘s photograph of the 1930 lynching of Thomas Shipp and Abram Smith in Marion, Indiana. He published the poem in 1936 in The New York Teacher, a union magazine. Though Meeropol/Allan had often asked others (notably Earl Robinson) to set his poems to music, he set “Strange Fruit” to music himself. The piece gained a certain success as a protest song in and around New York. Meeropol, his wife, and black vocalist Laura Duncan performed it at Madison Square Garden. (Meeropol and his wife later adopted Robert and Michael, sons of Julius and Ethel Rosenberg, who were convicted of espionage and executed by the United States.)
Barney Josephson, the founder of Cafe Society in Greenwich Village, New York’s first integrated nightclub, heard the song and introduced it to Billie Holiday. Other reports say that Robert Gordon, who was directing Billie Holiday’s show at Cafe Society, heard the song at Madison Square Garden and introduced it to her. Holiday first performed the song at Cafe Society in 1939. She said that singing it made her fearful of retaliation, but because its imagery reminded her of her father, she continued to sing it. She made the piece a regular part of her live performances. Because of the poignancy of the song, Josephson drew up some rules: Holiday would close with it; second, the waiters would stop all service in advance; the room would be in darkness except for a spotlight on Holiday’s face; and there would be no encore.
Holiday approached her recording label, Columbia, about the song, but the company feared reaction by record retailers in the South, as well as negative reaction from affiliates of its co-owned radio network, CBS. Even John Hammond, Holiday’s producer, refused. She turned to friend Milt Gabler, whose Commodore label produced alternative jazz. Holiday sang “Strange Fruit” for him a cappella, and moved him to tears. Columbia allowed Holiday a one-session release from her contract in order to record it. Frankie Newton’s eight-piece Cafe Society Band was used for the session. Because he was worried that the song was too short, Gabler asked pianist Sonny White to improvise an introduction. Consequently Holiday doesn’t start singing until after 70 seconds. Gabler worked out a special arrangement with Vocalion Records to record and distribute the song.
She recorded two major sessions at Commodore, one in 1939 and one in 1944. “Strange Fruit” was highly regarded. In time, it became Holiday’s biggest-selling record. Though the song became a staple of her live performances, Holiday’s accompanist Bobby Tucker recalled that Holiday would break down every time after she sang it
Southern trees bear strange fruit,
Blood on the leaves and blood at the root,
Black body swinging in the Southern breeze,
Strange fruit hanging from the poplar trees.
Pastoral scene of the gallant South,
The bulging eyes and the twisted mouth,
Scent of magnolia sweet and fresh,
Then the sudden smell of burning flesh!
Here is fruit for the crows to pluck,
For the rain to gather, for the wind to suck,
For the sun to rot, for the tree to drop,
Here is a strange and bitter crop.
Apr 20 2012
Not what you think.
Sequoia Fund Manager Campaigns Against Goldman Board Member, Former Fannie CEO Jim Johnson
Yves Smith, Naked Capitalism
Thursday, April 19, 2012
I had a colleague tell me today that I shouldn’t use the “c” word, meaning corruption, since it would alienate potential allies. The logic is similar to arguments against being shrill. He claimed that even if a lot of people in positions of authority engage in corrupt looking behavior, that doesn’t mean they understand it to be corrupt, so calling the corrupt will merely get them worked up to no useful end. They could well think they are doing the right thing and just be victims of cognitive capture.
I deeply oppose this line of argument. First, it assumes that decision-makers don’t recognize when they are taking ethically problematic actions. The people I know who have yielded to institutional pressures to do the wrong thing say they knew they were doing so and found a way to rationalize it. And I suspect even sociopaths know where the lines are. They have to do a better job of covering their tracks when their conduct is dubious.
Second, it assumes that it isn’t worth taking a firm position on ethics because it will turn off powerful people who have engaged in questionable behavior. Better to be less accusatory in order to have a dialogue with them. I don’t buy that because being indulging their justifications of their conduct helps preserve a bad status quo.
One aspect of American exceptionalism is many still believe the US is cleaner and more above board than most other advanced economies. But if you go overseas, you will find that a lot of businessmen see the US as not particularly ethical. One British colleague who has worked with major US firms described the US as becoming more and more a scam-based economy (in fairness, he was really talking about the financial services industry). An American who works a great deal with foreign investors said his clients saw the US at best as on a par with other big countries, at worst, with Russia.
One of the big reasons for the erosion in US behavior is the notion that elite crimes shouldn’t be prosecuted because it would harm the system. Glenn Greenwald describes the pardon of Richard Nixon as a critical embodiment of this principle.
So it is important to define norms and not shy away from words like “fraud” and “corruption” when they fit. While it would be nice if more people in power were capable of feeling guilt, shame will do. Thus naming and shaming are legitimate strategies for letting the elites know that the broader public is not fooled.