Without much fanfare, the Residential Mortgage-Backed Securities working group leaked the name of its “lead coordinator” to Politico this week—Matthew Stegman, an assistant US Attorney in California, will serve as essentially an executive director and coordinate the disparate parts of the multi-agency, multi-state investigation.
The coordinator job has been of high concern to many progressive activists; they see it as crucial for keeping a complex investigation focused and smoothing out conflicts between different agencies. There was an early push for Representative Brad Miller to fill that role, and he was interviewed but not selected—because, he believes, the RMBS working group was afraid of industry blowback.
So what to make of Stegman? Some progressive groups were pleased. “Matthew Stegman is a career prosecutor who has put white-collar criminals behind bars,” said Nish Suvarnakar, Campaign Manager for the Campaign for a Fair Settlement. “That’s encouraging, but Americans won't be satisfied until the Wall Street bankers who initiated the foreclosure crisis are convicted for their crimes.”
Indeed, Stegman was already a member of a California-based mortgage fraud task force—though I’m not as certain his accomplishments there are necessarily exciting. I turned up a number of cases put forward by Stegman since being on the task force, but they are for fairly low-level fraud: for example, people who offered homeowners refinance loans that didn’t exist, and then forging the paperwork. There were not any prosecutions of major California financiers or banks, but rather investigations of mostly two-bit hucksters.
Many progressives are concerned that the task force, if it does anything, will only indict low-level financial fraud and fail to get at the root of the stuff that “blew up the economy,” in the words of Schneiderman earlier this year. I’m not sure Stegman’s appointment would assuage those concerns as someone like Miller would. That said, Stegman isn’t doing the actual investigating—that’s left to the task force members and their offices—and will simply guide the process. It’s good that (after almost five months) somebody is serving in that capacity.
But the Politico story had another troubling nugget:
A government source working on housing issues said the unit is struggling in part because of a lack of commitment from the White House since its roll out in the State of the Union, citing a leadership vacuum since DOJ Associate Attorney General Thomas Perrelli left the Obama administration in February.
“It’s not happening at the level that it should be happening,” the source said. “There’s no person with juice at the federal level that is banging heads and making sure things are happening the way they should.”
Task force members pushed back on that notion in the story, but it’s certainly cause for concern. If the RMBS working group is serious about going after major financial institutions—and bringing cases with penalties that would amount to almost the market capitalization for some banks—it’s going to need all the White House support it can get.