As someone lucky enough not to have an underwater home, I have had the luxury of not needing to learn the all the gory details of our broken housing finance system—full of undecipherable acronyms and the minutiae of regulation and arcane policy. So, I admit that I have only loosely been following the situation since the $25 billion fraud settlement between the big banks and the state attorney generals was announced.
But my curiosity was piqued again this week when I got an e-mail from CREDO Action protesting new information that the task force established to investigate what went wrong never received the staff that it was promised. And while the source of the hold up is unclear as is exactly how many staffers have been assigned, what is becoming clear is that even the promised fifty-five investigators would be ill-equipped to achieve its goals. That news got me wondering where things stand more generally with task force, lauded by progressives and homeowners alike when it was announced back in January.
In a recent NPR interview, William Black—the former litigation director for the Federal Home Loan Bank Board—pointed out that a hundred investigators were employed to get to the bottom of the Enron scandal ten years ago. That was a single company, and now we’re talking about delving into multiple business sectors to determine accountability and criminal wrongdoing in this crisis. For a more apples-to-apples comparison, the thousand-strong force investigating the Savings and Loans crisis in the 1980s returned a thousand felony convictions. The economic impact of the mortgage crisis is estimated to be forty times worse than the S&L debacle, and yet this under-staffed investigation has only been able to uncover enough evidence for ten convictions.
CREDO’s petition asking President Obama to staff up the task force well beyond the original promise has already yielded over 100,000 signers and over 1,100 calls to Obama For America headquarters, and I’m told CREDO has not even contacted all their members yet. This level of engagement is an indication that others like me who tune back in to find expectations unmet will have a strong response. Notably, a response that has the potential to trump queasiness progressives have about criticizing a Democratic president in an election year. But also a responding audience that clearly wants to use the instruments at hand to create a win for all involved.
One unintended consequence of the establishment of the task force is that many Americans felt like they could rest easy that justice was underway. Part of this feeling stemmed from the clear engagement of President Obama in his State of the Union address and part stemmed from the reputation of strength and integrity of the chair of the body, New York Attorney General Eric Schneiderman. Given the massive entrenched interests of the banks and the hyper-partisan political landscape, though, it appears that allies in government will need a strong outside consituency to make progress on this issue. Not doing so would be a huge missed opportunity for our economy and millions of Americans still waiting for relief.