Last week, New York attorney general Eric Schneiderman took his plea for more resources for the Residential Mortgage-Backed Securities working group to the Wall Street Journal. “Do I want more resources, and want things to go faster? Yes, Am I asking for more? Yes. Do I believe we’ll get that? Yes.”
This is a request Schneiderman has made frequently in recent weeks—he said the same thing to the Congressional Progressive Caucus in late April. Over at the New York Times, Peter Henning sees this as an ominous sign. “His statement is hardly a ringing endorsement of the working group’s effort because it is a common refrain to blame a lack of resources for the absence of any real progress on cases,” Henning writes.
I’m not really convinced that Schneiderman is already priming the pump for defeat—it seems just as plausible he’s trying to spark some action, publically and inside Washington, to give the task force the juice it needs. (Though Henning does make some valid points elsewhere that what the RMBS working group has done points away from any criminal prosecutions and towards civil settlements).
But what resources, exactly, might Schneiderman be able to count on? What should progressives invested in the outcome push for?
The Department of Justice asked for a $55 million funding increase for “investigating and prosecuting financial and mortgage fraud” in its Fiscal Year 2013 budget request. We noted last month that the House did not include this money in the appropriations bill it passed.
Prospects are brighter in the Senate, however. In April, the Senate Appropriations Committee passed out a bill funding Commerce, Justice and Science that did include the $55 million increase. It passed by a 27–2 vote. The committee’s report details what this would be used for:
The Committee strongly supports the Department’s efforts to go after the schemers and scammers who prey on hardworking American families, and destabilize our neighborhoods and financial markets. The recommendation provides the requested increase of $70,680,000, for a total of $747,352,000, to combat economic fraud and white collar crime. Within this amount, the Committee provides the requested increase of $55,000,000 and 328 new positions, including 40 new Federal Bureau of Investigation [FBI] agents, 184 new attorneys, 49 new in-house investigators, 31 new forensic accountants, 16 new paralegals and 8 new support staff. These funds and positions will be disbursed among the FBI, the U.S. Attorneys [USAs], and the Department’s legal divisions to investigate and prosecute the most complex financial fraud, such as securities and commodities fraud and investment scams, and mortgage foreclosure schemes.
The bill now goes to the full Senate for a vote, and it seems unlikely to me that money is stripped out—someone would have to propose and pass an amendment. But since the House version doesn’t include the money, the conference committee would have final say, and it’s anyone’s guess whether the funding survives. It’s also possible the whole process blows up (again) and Congress does nothing but pass continuing resolutions that just carry over the 2012 funding into 2013—meaning no $55 million increase.
However, even if it passes, there are a couple caveats. For one, the money isn’t specifically earmarked to the RMBS working group. But the timeline is the real catch here. Schneiderman has repeatedly said he wants to have some major action over the next several months, before the end of the summer. This is important because statutes of limitations are expiring every day.
And the political moment has an expiration date too—the midst of an election is a good time to push for more aggressive Wall Street accountability. We’ve noted that polling shows significant risk for President Obama if people think he’s soft on Wall Street; even independents in purple states think that’s already the case and don’t like it. During the campaign season the White House can effectively be pressured to help the investigation along and give it what it needs. That calculus may change after the election—and if Romney wins, forget about it.
The Congressional appropriations process is simply too slow to deliver resources now, when it counts. I wouldn’t expect any bills to be passed and signed before mid-to-late summer anyhow, if it even happens, and then you have the grindingly slow process for hiring in the federal bureaucracy. It’s hard to see the $55 million making a real impact on the working group before the end of the calendar year.
It’s not that the funding doesn’t matter—it does, and if the working group brings some cases this year, it will definitely need the extra resources for trials down the road.
But with Schneiderman repeatedly saying he needs more resources, and with any cavalry from Congress sure to ride in late, the administration must dedicate or redirect existing resources to fully support the working group. That’s the only way to support the RMBS during the crucially important weeks and months to come.