The Man the Banks Fear Most
jcase
Sent to you by jcase via Google Reader:
In February 2011, one month after he’d been sworn in as New York state’s attorney general, Eric Schneiderman sat down with the staff attorney who’d been delegated to track the negotiations that the 50 state attorneys general and the Obama administration were conducting with five of the country’s biggest banks. A few months earlier, the story had broken that the banks had been “robo-signing” thousands of notices foreclosing on homes. Instead of assessing how far behind in their payments the homeowners had fallen or seeking to modify the terms of their mortgages, the banks had employed junior staffers, some hired right off the street, to sign hundreds of foreclosure documents daily, though the banks’ title to many of the properties was uncertain. Even when the banks’ claims to ownership were clear, robo-signing violated numerous state laws requiring due diligence before a bank can foreclose on a home.
The scandal had prompted a number of banks—Bank of America most prominently—to suspend their foreclosures for a while. The Justice Department, the Department of Housing and Urban Development, and the state attorneys general had initiated talks with Bank of America, as well as JPMorgan Chase, Citibank, Wells Fargo, and Ally Financial to arrive at a settlement for these abuses. As the only state law-enforcement official with direct jurisdiction over Wall Street, Schneiderman had been named to the committee the attorneys general had established to negotiate with the banks. He asked his aide how the talks were going.
“I was told it was being handled,” he says. The administration, his aide informed him, had proposed that the banks come up with $20 billion for aggrieved homeowners and former homeowners. Schneiderman wasn’t satisfied. What documents, he asked, had been subpoenaed? None, he was told. Who’d been called in to testify? Nobody, he was told. Most important, what did the banks want in return for paying the penalty? The aide responded that the issue had never been raised. Schneiderman was shocked.
“This didn’t make any sense,” he says. “You can’t negotiate anything like this without knowing what you’re giving up. We get $20 for what? A tie clip? A car?”
Schneiderman had been a successful Wall Street attorney before he turned to public-interest law and then served 12 years as the de facto leader of liberal Democrats in the New York Senate. He’d represented banks and exchanges in complex fraud litigation. He knew that the banks wouldn’t enter negotiations without expecting, at the very least, immunity from any lawsuits emanating from the robo-signing.
“I had friends at the banks,” he says. “I had friends who were lawyers for the banks. I talked to them, and they said they wanted a release from everything.”
It wasn’t just foreclosing on homes without the required due diligence on which the banks wanted a pass. They wanted a release from any crimes they may have committed in originating unsound mortgages and then bundling those mortgages into securities that they assured investors were safe, even when they knew otherwise, and unloading them at a profit—at times, even betting against them. They wanted a release, that is, from all liability for the misconduct that had plunged the United States into the deepest and most intractable recession since the 1930s.
Schneiderman’s manner is hardly that of a populist firebrand. Indeed, he has an impeccable Wall Street pedigree. His father, Irwin Schneiderman, was outside counsel for Drexel Burnham Lambert in the 1980s, where he helped Michael Milken devise the junk-bond trade. A close family friend was Joseph Flom, the legendary attorney who became corporate America’s primary adviser on takeovers, both friendly and hostile. At 57, trim and quietly combative, Eric Schneiderman looks every bit the discreet, no-nonsense counselor whom a bank would want to represent it in complex litigation. (A sign on his desk reads, “Assume nothing.”) Amicably divorced for the past dozen years from political consultant Jennifer Cunningham (she managed his 2010 campaign for attorney general), father of a 19-year-old daughter with whom, friends attest, he’s famously close, Schneiderman has a regular-guy demeanor that belies his history of taking on—and often winning—impossible battles.
One month after his briefing on the talks, Schneiderman traveled to Washington, D.C., for his first meeting of the National Association of Attorneys General, where the negotiations with the banks were a chief topic of discussion. (His staff told him he had to make an appearance: His predecessor, Andrew Cuomo, had never attended, and Cuomo’s predecessor, Eliot Spitzer, stopped going after he almost punched out a colleague.) The more Schneiderman pressed his new colleagues on the direction of the talks, however, the more displeased he became.
***
The primary concern of the attorneys general was how much and how quickly the banks would pay and whether they’d be compelled to write down the amount homeowners owed them. Important questions, but what about what the banks wanted in return? That would only come up, Schneiderman was told, at the conclusion of the talks. His Republican colleagues were focusing on giving the banks a less costly alternative to writing down mortgages. His Democratic colleagues were pushing for a prompt payout to beleaguered homeowners. How broad a release the banks would demand had become a side issue.
“We thought homeowners needed relief now,” says Tom Miller, the Iowa Democrat who is the nation’s senior state attorney general and who was heading up the negotiating team. What Schneiderman was calling for—an investigation of the banks’ practices leading up to the 2008 crash—might delay a settlement for years.
Schneiderman objected. “I told Tom Miller I didn’t think his strategy made sense,” he says. “I said you can’t release the banks from claims that haven’t been investigated.” Otherwise, he was convinced, the government would have no leverage and the banks’ payout would be far lower than it should be.
Schneiderman, though, brought leverage of his own: Given his jurisdiction over Wall Street, he knew that the banks would not agree to a deal without his signature. He also had the authority to launch an investigation by himself. New York has the strongest securities-fraud law in the land, the 1921 Martin Act, which empowers its attorney general to investigate and prosecute financial fraud by subpoenaing any document from anyone doing business in the state and to call people in for questioning with no right to counsel and no right to avoid self-incrimination. It gives the attorney general the right to file either civil or criminal charges at any time.
When Schneiderman returned to New York, he detailed 21 attorneys to start looking into the banks’ records. His first ally was Delaware Attorney General Beau Biden. New York is home to three-quarters of the trusts that insure the securities into which mortgages are bundled for the banks to sell; Delaware is home to the rest. Like Schneiderman, Biden was apprehensive about the direction of the negotiations and launched his own investigations of the trusts.
By June, the Justice Department had outlined a settlement that both Democrats and Republicans could support—all but Schneiderman and Biden. The reaction to their obstinacy was swift. High-ranking administration officials made calls to some of Schneiderman’s leading supporters, arguing that his investigative zeal shouldn’t delay a settlement. “It wasn’t personal,” Schneiderman says. “They were trying to close the deal. I said we should hold out for a better deal.”
Pressure from Washington wasn’t the only challenge Schneiderman faced. He knew that he and Biden couldn’t effectively go after the banks by themselves. Strong as the Martin Act was, the statute of limitations on crimes committed in the run-up to the 2008 collapse limited the scope of his investigation. Nor were 21 attorneys remotely sufficient to clean the Augean stables of bank misconduct, which spanned millions of property records in thousands of county courthouses. Even more daunting, the five banks with which the government was negotiating had legal and financial resources that were comparable to the government’s. “That’s what ‘too big to fail’ means,” says one attorney who worked with Schneiderman. “Jamie Dimon at JPMorgan thinks he can stand off the federal government if he deploys his full resources. He can crush a single state attorney general.”
Schneiderman understood this all too well. The settlement he started calling for would limit the releases solely to crimes committed in the robo-signing scandal but still hold the banks liable for those committed before the collapse. He also called for setting up a joint task force from state attorneys general’s offices, regional federal prosecutors, and a host of federal agencies—not just Justice, but also the FBI, the IRS, and the Securities and Exchange Commission (SEC), among others—to conduct an all-out investigation.
Schneiderman set out to rally public support for his position. This, in fact, had been his hallmark during his years in the New York Senate, where he had consistently spurred progressive organizations to mount grassroots campaigns in support of legislation. Arguing that his fight against a premature settlement opened the door to the kind of investigation into the banks that liberals had long sought, Schneiderman met in early summer with the leaders of the AFL-CIO, the Service Employees International Union, MoveOn.org, financial-reform groups, and community-housing advocates. They, in turn, urged other key attorneys general to withhold their support for a settlement until the deal was sweetened and Schneiderman’s conditions met.
***
Six months later, Schneiderman prevailed. In his State of the Union address, President Barack Obama announced that he was establishing a joint working group to investigate the banks. The members would be drawn from the federal agencies Schneiderman had requested and the staffs of U.S. prosecutors and state attorneys general. The president designated Schneiderman as one of the five co-chairs of the group. Obama also made clear that the settlement would not include releases for bank misconduct in originating and securitizing mortgages. In February, the administration and the attorneys general announced that the deal—which was increased from $20 billion to $26 billion to satisfy attorneys general from states with high rates of foreclosure—had been completed.
Today, the staffing of the working group and the investigations themselves are under way. We don’t know, of course, what these inquiries will turn up, but depending on what they uncover, they could accomplish four goals that have so far eluded the Obama administration.
First, by offering a rigorous examination of Wall Street misconduct, they have the potential to do what the Pecora investigation of the early 1930s did for Depression-era America: provide an authoritative account of the role financial institutions played in plunging the nation into economic hell, a narrative that lays the groundwork for subsequent reforms.
Second, they could produce a settlement with a payout to homeowners and investors that dwarfs the $26 billion robo-signing payout—a settlement sufficient to begin restoring both the housing market and the broader economy.
Third, they could result in criminal indictments of banking executives.
Fourth, should the banks’ liabilities and culpabilities exceed the banks’ capacities to make amends, they could even force some banks to restructure. This remains a remote possibility, but even the threat of breaking up a major bank could lead to a sounder and more equitable financial system.
I’m not a believer in the Great Man Theory of History,” says Schneiderman, walking across his spacious but spartan office. “To make history, you have to do movement-building, organizing. The role model for lawyers like me is Charles Hamilton Houston.” On a bookshelf are multiple copies of Houston’s biography, Groundwork: Charles Hamilton Houston and the Struggle for Civil Rights by Genna Rae McNeil. Schneiderman reaches into the stack and hands me a copy. (“He’s a maniac,” says a Schneiderman friend. “He gives that book to everybody.”)
“I first stumbled across Houston,” Schneiderman says, “because, like me, he went to Amherst and Harvard Law.” He doesn’t need to explain that for Houston—an African American in the early 20th century—these were more notable achievements than they were for an upper-class Jewish boy in the late 20th century. In the 1930s, Houston became the first counsel of the NAACP. In 1934, he authored a strategy paper arguing that by carefully selecting the most precedent-setting desegregation cases to pursue in court, the organization could build up a body of case law that would one day compel the courts to overturn Plessy v. Ferguson and the entire Jim Crow order. Houston died in 1950, but four years later, the attorney he’d hired as his deputy, Thurgood Marshall, persuaded the Supreme Court to strike down the doctrine of “separate but equal,” in a decision based on a series of more modest but foundational rulings that Houston had won over the preceding two decades.
Houston, though, didn’t believe the battle against segregation could be won in the courts alone. He relentlessly toured the country, enlisting black families in the fight. He instructed communities in how to read school--district budgets and lobby school boards. He produced a documentary film on racial discrimination in South Carolina schools. Because the news media of the day didn’t cover the systemic discrimination that African Americans endured, Houston urged them to confront elected officials—a story that the media could not so easily dismiss.
***
That Schneiderman would take Houston as his hero is not surprising. Raised in the liberal bastion of Manhattan’s Upper West Side, Schneiderman early on embraced many of its causes. At 15, he marched in the 1970 anti-war demonstration on Wall Street where hard hats attacked the protesters. At 18, he volunteered at a family-planning clinic in Washington, D.C., where he would drive to the airport to pick up women from Southern states who were flying into the District to obtain a legal abortion. (His father served on the board of the National Abortion Rights Action League for nearly two decades.)
After graduating from Harvard Law, Schneiderman spent 15 years at Kirkpatrick and Lockhart, initially representing clients like Merrill Lynch and the American Stock Exchange in civil litigation. For some on the left, he acknowledges, it’s hard to believe that “you can understand how markets work and still be progressive.” In fact, however, Tommy Corcoran and Ben Cohen—the New Deal attorneys who drafted many of Franklin Roosevelt’s securities regulations that kept Wall Street in check for the next half-century—had both practiced financial and corporate law in New York before going to work for Roosevelt.
In the 1990s, Schneiderman became his firm’s public--interest law specialist, representing, most notably, New York’s Straphangers Campaign. His lawsuits compelled the city’s Metropolitan Transportation Authority to create discount Metro cards for low-income riders and to keep more token booths in operation. By the end of the decade, he had become the leading attorney for many of New York’s progressive activist organizations. “If you were pro-choice, you knew him,” says Dan Cantor, executive director of New York’s Working Families Party and a longtime Schneiderman ally. “If you were a consumer-rights activist, you knew him.”
Grassroots activists, though, could only accomplish so much, Schneiderman concluded, in the absence of enlightened government. Early on and virtually alone, he took it upon himself to make New York’s legislature more progressive. Jerrold Nadler, the veteran congressman and former assemblyman from Manhattan’s West Side, first met Schneiderman in 1987, when Schneiderman had detoured from his law practice to work as an aide for Mel Miller, the Democratic Assembly speaker. “He was heading a committee to create a Democratic senate,” Nadler says, “even though [then-Governor] Mario Cuomo wasn’t interested in a Democratic senate nor was the speaker.”
For decades, New York has been overwhelmingly Democratic, with substantial Democratic majorities in its congressional and assembly delegations. Also for decades, the state senate had remained Republican, a mathematical anomaly achievable only through extreme gerrymandering. Albany had become a cozy company town. There was an unspoken agreement that Democrats would not challenge Republican senators at election time, nor would Republicans challenge the Democrats.
When Franz Leichter, the longtime Democratic state senator from the Upper West Side, announced that he would not seek re-election in 1998, Schneiderman entered the race and won an easy victory. He set out to turn the senate Democratic, a transformation that required the party to pick up six seats. He recruited candidates for the 2000 election and raised more money than the Democrats had in years—and all six candidates lost. Schneiderman’s aggressiveness angered both the Republican and Democratic senate leaders, and in the redistricting following the 2000 census, they carved his West Side district out of existence, placing him instead in a predominantly Dominican district and recruiting a Dominican candidate to run against him. To Albany’s astonishment, and with substantial assistance from unions and progressive groups who supported his efforts to remake the senate, Schneiderman handily won the election.
He continued to work to increase the Democrats’ senate delegation, cultivating candidates and framing issues to the Democrats’ advantage. By controlling the senate’s agenda, the Republicans had for years prevented the Democrats from compelling them to take unpopular votes. In response, Schneiderman began forcing procedural votes on issues like reproductive rights, on which the GOP senators’ no votes rendered them vulnerable. He also managed a coup against his own party’s don’t-rock-the-boat senate leader, Marty Connor, replacing him with the more liberal David Paterson.
After picking up seats in 2004 and 2006, Democrats in 2008 finally wrested the senate from the Republicans, who had been in the majority for nearly 60 years. In the next two years, Schneiderman steered a number of long-bottled-up reforms to passage. The Rockefeller drug laws were scaled back and taxes raised on the wealthy. He had for many years argued that ascribing nonvoting prison populations to the districts where the prisons were located unjustly increased the number of rural conservative seats and diminished liberal inner-city representation. In 2010, the legislature passed a law ending this practice.
***
Schneiderman’s modus operandi was always the same: He mobilized the support of activist groups to help push through these and other measures. He encouraged the Prison Policy Initiative, the Brennan Center, Citizen Action, and De¯mos (the think tank with which The American Prospect is now affiliated) to document the disfranchising effects of prison gerrymandering. To raise the state’s tax rate on the wealthy, he enlisted the Working Families Party and unions like the Communications Workers of America and the Service Employees International Union to canvass the districts of legislators who were on the fence.
“Eric goes outside on issue after issue,” says Valerie Berlin, who was his senate chief of staff. “He would match up people and groups with vulnerable elected officials.” In his first term, following the 1998 murder of a Buffalo physician who provided abortions, Schneiderman championed—and Republican senators opposed—a bill to protect family-planning clinics. Soon, activists were leafleting for the bill on train-station platforms in the Long Island districts of the senators. “The senators couldn’t believe that people were actually talking to their constituents,” Berlin says. “It broke the rules of Albany: You don’t go into my district. I don’t go into yours. But it worked. We passed the bill—the first pro-choice legislation Albany had passed in years.”
Schneiderman hadn’t planned to run for attorney general in 2010, so soon after the Democrats had retaken the senate. Four years earlier, Eliot Spitzer had been elected governor, David Paterson lieutenant governor, and Andrew Cuomo attorney general, and Schneiderman had every reason to assume they’d serve in those offices until 2014. Then Spitzer resigned in a prostitution scandal. Paterson, who succeeded him, had a rocky tenure and chose not to stand for election. And Cuomo announced he’d run for governor, creating a vacancy in the attorney general’s office.
Five Democrats campaigned for Cuomo’s job. The favorite was Nassau County District Attorney Kathleen Rice, a former Republican whom Cuomo discreetly supported—she mirrored his centrist inclinations. Schneiderman, however, proved the more dynamic candidate. He had avid support from the state’s liberal organizations. His politics were also more attuned to those of the Democratic primary electorate and the editorial board of The New York Times, which gave him an enthusiastic endorsement. He won a narrow victory over Rice in the primary and dispatched his Republican opponent by an 11-point margin in November.
The view from Schneiderman’s 25th-floor office window takes in a landscape of downtown-Manhattan skyscrapers as dull and undistinguished as his own. Looking down, however, he can glimpse Zuccotti Park directly across from his building. In September, as Schneiderman was taking phone calls urging him not to delay the settlement with the banks, a ragtag band of demonstrators camped out in the park and began stoking public sentiment against those banks. Neither Schneiderman nor the Obama administration—nor anyone else—had foreseen Occupy Wall Street and the shift it would engender in the nation’s political discussion.
“They gave voice in a more flamboyant way,” Schneiderman says, “to what people all around America were saying: that we needed accountability, that there had to be one set of rules for everyone.” The wide acceptance of Occupy’s message, he says, created a more favorable terrain on which he maneuvered to bring the banks to justice.
In September, though, Schneiderman’s main fight was not with the banks but with fellow liberals. Housing Secretary Shaun Donovan, a former New York City housing director whose rolodex included many of the same organizers as Schneiderman’s, saw the robo-signing settlement as the only way to compel the banks to write down the value of mortgages. He knew that a settlement strictly for the banks’ robo-signing offenses would likely be much smaller than one that assessed them for their sins of securitization. But, along with Iowa’s Tom Miller, he opposed making homeowners wait several more years until investigators had pored through the banks’ byzantine records.
Donovan had already spent two and a half years trying to get the banks to reduce the mortgages of millions of underwater homeowners and had little to show for his efforts. “We had no principal reduction happening,” he says. “So many of our policies were dependent on voluntary programs”—for which the banks had declined to volunteer. He also knew that legislation compelling the banks to write down mortgages would never get through a Republican-controlled House. In early 2011, Donovan presented his findings on the banks’ resistance to write-downs and on the scope of robo-signing to Obama. “The president,” Donovan says, “was furious. He talked about the letters he read every night from beleaguered homeowners around the country. He pushed us to be as aggressive as possible.”
Once the Republican attorneys general had agreed that the banks should be forced to write down mortgages, Donovan began talking to Schneiderman about increasing the amount of the settlement. That wasn’t what the attorney general was seeking, however. Schneiderman believed the amount of the settlement wouldn’t grow to anything near what it could be absent the kind of evidence only a full-scale investigation could turn up.
By late summer, more of the Democratic attorneys general were backing off the deal, either because they were siding with Schneiderman and Biden or because they believed the proposed settlement was financially inadequate. The list of refuseniks had grown to include Minnesota’s Lori Swanson and Massachusetts’s Martha Coakley. The key to blocking the deal—besides Schneiderman—was California’s Kamala Harris. Like Schneiderman, Harris had been elected attorney general in 2010, and also like Schneiderman, she brought considerable liberal cachet to the job. But California community organizations and unions weren’t certain that Harris would reject the initial settlement. Schneiderman’s allies reached out to prominent California liberals, among them the state’s lieutenant governor, Gavin Newsom. It was a savvy move: Newsom is considered Harris’s most likely opponent in the race for governor when Jerry Brown’s term is up. Newsom’s name appeared in an ad that ran in the state’s leading newspapers, calling on attorneys general to hold out for better terms than the settlement offered. When Harris announced on September 30 that she, too, was pulling out of the talks, the deal was dead.
Then the world changed. Occupy Wall Street brought the issue of economic inequality to public prominence; President Obama’s attempt during the summer to accommodate Republicans over the debt ceiling had produced nothing but plummeting poll numbers. Liberals—his party’s base—were repelled not just by his efforts to cut a deal with the Republicans but also by his reluctance to take on the banks. The president responded with an increasingly populist message, and as he pivoted, Schneiderman’s call for investigating the banks resonated more loudly within the White House.
Donovan, in fact, had long favored such an investigation but had been unable to overcome the opposition of other administration officials. “Eric gave Shaun room to move things in the administration that Shaun hadn’t been able to move by himself,” says an attorney who is close to both.
“We decided in November to make a major move on principal reduction,” an administration official says. The White House was open as well to the kind of investigation Schneiderman was advocating. Donovan then called Schneiderman and told him that the administration’s position had shifted.
As Schneiderman recalls the phone call, “Donovan said, ‘Let’s do a joint investigation.’ I said, ‘This is a better conversation than I expected.’”
***
For his part, Schneiderman was persuaded that deferring the robo-signing settlement meant that all 50 attorneys general could exercise control over—and possibly hinder—the investigation he sought. “Herding 50 attorneys general was worse than herding cats,” says the administration official. Once the robo-signing suit was disposed of, however, a new investigation led by Schneiderman and the Obama administration could move forward with fewer impediments.
This meant having to craft releases for robo-signing that still preserved the feds’ and the states’ rights to investigate and prosecute the banks for their earlier crimes. That posed no small legal challenge. Associate Attorney General Tom Perrelli had crafted narrow releases, but starting in November, Schneiderman, Donovan, and Perrelli met repeatedly to make sure the final language was sufficiently airtight.
The other question they sought to resolve was which agencies would become part of the working group, as the joint investigative unit came to be called. For Schneiderman, including the SEC, FBI, and IRS were essential. Schneiderman particularly wanted the IRS, because he believes the banks may have manipulated the registration of mortgage-backed securities with the New York– and Delaware-based trusts in a way that illegally lowered their tax bills by hundreds of billions of dollars. (One attorney says the amount may go as high as $3 trillion.)
The White House wanted the president to be able to announce the settlement in his State of the Union address. This required coming to terms on the size of the bank payout with California’s Harris and on the composition of the working group with Schneiderman. The talks among Harris, the administration, and the banks dragged on for a couple of weeks after the address. The deal with Schneiderman was still not in place at 2 P.M. on the afternoon of the speech, when the White House released a list of the 23 guests who’d sit in Michelle Obama’s box. That night, when the president walked to the podium, there was a 24th guest. Schneiderman was sitting right behind the first lady, and Obama acknowledged him as he announced that the first group with prosecutorial power to investigate Wall Street misconduct had come together. Earlier that evening, Schneiderman had secured the resources he’d sought.
The White House had recognized that it needed to assure Schneiderman of its seriousness in going forward with the investigation. “Eric didn’t want to do an agreement and wake up the next day to find it didn’t amount to anything,” says an administration official. Just a letter of intent wouldn’t do it, so the White House decided to make a public commitment that put the president’s own imprimatur on the investigation. Once the deal was reached, the official says, “we told Schneiderman we’d announce it in the State of the Union and put him in the first lady’s box.”
In February, a few days before the robo-signing settlement was finally announced, Schneiderman made clear that it wouldn’t deter him from further legal action. He filed suit against Bank of America, JPMorgan Chase, Wells Fargo, and the Mortgage Electronic Registration Systems (MERS), which the banks had established in the 1990s to expedite mortgage securitization. MERS is charged with registering changes to legal title through the sale and resale of mortgage-backed securities. A preliminary investigation undertaken by Biden had shown that MERS often failed at its most basic task: tracking the identity of the owners.
MERS was a product of a time when the regulations on American finance were being steadily—and Schneiderman believes, disastrously—weakened. “Wall Street’s a culture where people push against the edges and need authorities to define those edges and enforce them consistently,” he says. “Financial markets work well when treated like a football game with rules and someone to blow the whistle. They don’t work well when they’re treated like a street fight, because everyone wants to play hard.”
Given the administration’s refusal to so much as look at bank criminality during its first three years, a number of progressives have expressed fear that the administration is taking Schneiderman for a ride, that it wants only to say the right thing through the election, at which point it will dump his investigation. Schneiderman doesn’t buy that critique. Had he just refused to deal and chosen to conduct an investigation by himself, his lack of both staff and jurisdiction would have limited him to a small settlement at best. But he understands the gamble he’s taken if it turns out, as the critics charge, that he’s signed on to a Potemkin investigation.
“Eric took the risk of working with the administration,” says an attorney close to him, “because this was the only path that led to the public getting relief from the crisis. This is what you want from a political leader. A ‘pure’ political leader who stands outside the process isn’t very helpful. A political leader who just goes along isn’t helpful either. But to do what Eric did means you have to take an enormous risk. If he fails, if the investigation doesn’t become real, he will have to choose between denouncing the president in an election year or becoming party to something he spent a year denouncing.”
Schneiderman says that the investigation will be successful if it accomplishes three objectives. “We have to get accountability,” he says. “We have to get substantial relief for homeowners and investors, in the form of principal write-downs and reductions. And we have to get the story told clearly so the right doesn’t rewrite history. If we don’t lay out what actually happened, it will all happen again.”
In the weeks since the State of the Union, Schneiderman has been busy assembling the working group and recruiting its leaders. By late March, 11 state attorneys general and 8 U.S. attorneys’ offices had joined the group. The Justice Department has put 55 attorneys on the case, and its new budget creates positions for several hundred more.
Schneiderman assumes that the pressure from the banks to limit the size and scope of the investigation will increase as it begins to turn up evidence of possible misconduct. He believes that the only way the investigations will succeed will be because liberals insist on it. Charles Hamilton Houston, his beau ideal of a social-change attorney, understood that politics depends on movements. “This is something that progressives have lost their sense of,” Schneiderman says. “I need everyone out there to help us make this investigation as strong and thorough as it needs to be.”
Things you can do from here:
- Subscribe to The American Prospect using Google Reader
- Get started using Google Reader to easily keep up with all your favorite sites