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Thursday, August 25, 2011

Amnesty for the Indefensible

Amnesty for the Indefensible
By Robert Scheer
Truthout.org
Thursday, August 25, 2011

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 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.

It's 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 were worth.

The $20 billion or so that the banks would pony up is, for them,
chump change -- compared with the trillions that the Fed and
other public agencies spent to bail them out.

The banks were given direct cash subsidies and 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 editor of truthdig.com

http://www.truth-out.org/amnesty-indefensible/1314211785

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