This story originally appeared at Truthdig. Robert Scheer is the author of The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street (Nation Books). They will get away with it, at least in this life. “They” are the Wall Street usurers, people of a sort condemned in Scripture, who have brought more misery to this nation than we have known since the Great Depression. “They” will not suffer for their crimes because they have a majority ownership position in our political system. That is the meaning of the banking plea bargain that the Obama administration is pressuring state attorneys general to negotiate with the titans of the financial world.
It is unfathomable that yet another Texas blowhard governor has emerged as a front-runner for the GOP presidential nomination.
The economy is a shambles, saved from a free fall only by the Federal Reserve’s unprecedented promise of free money for banks for at least two years.
It is a sellout deal that, in return for a pittance of compensation by banks to ripped-off mortgage holders, would grant the banks blanket immunity from any prosecution. That is intended to short-circuit investigations by a score of aggressive state officials, inquiries that offer the public a last best hope to get to the bottom of the housing scandal that has cost U.S. homeowners $6.6 trillion in home equity in the past five years and left 14.6 million Americans owing more than their homes are worth.
The $20 billion or so that the banks would pony up is chump change to them compared with the trillions that the Fed and other public agencies spent to bail them out. 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.
Yet the administration has rushed to the aid of the banks once again and is attempting to intimidate the few state attorneys general who have the gumption to protect the public interest they are sworn to serve. As Gretchen Morgenson of The New York Times reported:
“Eric T. Schneiderman, the attorney general of New York, has come under increasing pressure from the Obama administration to drop his opposition to a wide-ranging state settlement with banks over dubious foreclosure practices. …
“In recent weeks, Shaun Donovan, the secretary of Housing and Urban Development, and high-level Justice Department officials have been waging an intensifying campaign to try to persuade the attorney general to support the settlement. …”
Donovan has good reason not to want an exploration of the origins of the housing meltdown: He has been a big-time player in the housing racket for decades. Back in the Clinton administration, when government-supported housing became a fig leaf for bundling suspect mortgages into what turned out to be toxic securities, Donovan was a deputy assistant secretary at HUD and acting Federal Housing Administration commissioner. He was up to his eyeballs in this business when the Clinton administration pushed through legislation banning any regulation of the market in derivatives based on home mortgages.
Armed with his insider connections, Donovan then went to work for the Prudential conglomerate (no surprise there), working deals with the same government housing agencies that he had helped run. As The New York Times reported in 2008 after President Barack Obama picked him to be secretary of HUD, “Mr. Donovan was 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.”
The HUD website boasts in its bio of Donovan that “under Secretary Donovan’s leadership, HUD has helped stabilize the housing market and worked to keep responsible families in their homes.” If that is so, we have to assume that the tens of millions savaged by an out-of-control banking industry were not “responsible.” And if the housing market has in any way been “stabilized,” why did the Commerce Department report Tuesday that new home sales have dropped for the third month in a row?
Shifting the blame from the swindlers to the victims is the cynical rot at the core of the response of both the Bush and Obama administrations to the housing collapse. It is a response that aims to forgive and forget the crimes of Wall Street while allowing ordinary folks to sink deeper into the pit of debt and despair. It infects Donovan and many others who claim to be concerned for the very homeowners they are betraying by undermining the few officials such as Schneiderman who seek to hold the bankers accountable.
In her article about the pressure being brought to bear on Schneiderman to go along with the sellout, Morgenson reported that according to an attendee at a memorial service this month for former New York Gov. Hugh Carey, as Schneiderman was leaving he “became embroiled in a contentious conversation with Kathryn S. Wylde, a member of the board of the Federal Reserve Bank of New York who represents the public.”
When interviewed by Morgenson, Wylde claimed that her conversation with Schneiderman was “not unpleasant” but that she told him “it is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street—love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.”
When haven’t they done that?
Robert Scheer is the author of The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street (Nation Books).
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The Maestro's empty hat.
Monday may be a very bleak day in the United States of America. Time will tell.
From appearances, one would suspect that the real rabbits are long gone, and that Eddie's virtual rabbits have passed through the pot as well. The amount of emphasis placed on the Maestro's appearance in Jackson Hole, demonstrate the need for an economic miracle. We need to be cautious about buying into this expectation.
There are many possible reasons why the Maestro might, with doleful face, show the audience the empty inside of the hat, after trying with all his might to conjure one more rabbit for the pot. Perhaps the producers, annoyed by the restive audience, have decided to close the doors. Perhaps the show is over".? Probably not. As they say, "the show must go on." Preferring, as we do, happy endings, we will be overjoyed, on the morrow, to find that there will be a show. The quibbling details of higher ticket prices, and cheaper, smaller seats, further from the stage, won't bother us too much. The show must go on.
Obama certainly is a total fraud. I am not voting for him. The Republicans are no better. Time to go to a third party.
Washington D.C. certainly is a cesspool of corruption, and it is destroying the U.S. I expect to see social upheaval in the U.S. at some point in the future. I cannot believe Americans are going to sit back and be pillaged and plundered forever.
Obama is a fraud.
The National Democratic Party is a fraud.
De-elect them all. Vote progressive third party in 2012.
ABO - anyone BUT Obama.
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