Nearly half a year has passed since President Obama announced the creation of the Residential Mortgage-Backed Securities working group in his State of the Union address, a task force that would investigate big financial firms for their role in the 2008 crash.
Yet, unbelievably, we’re still talking about how many resources the task force will have and how many people it will hire—not about any subpoenas nor indictments. And this is as the statute of limitations is running out on a wide variety of that pre-crash behavior, as the Wall Street Journal noted again today.
A collection of housing rights groups that heralded the creation of the RMBS working group in January is now throwing down the gauntlet—declaring today on a conference call that officials at the Department of Justice “are not taking this investigation seriously, nor…are they giving it the resources it needs to proceed,” in the words of Campaign for a Fair Settlement’s Brian Kettenring.
His group released a white paper showing that despite an obvious spike in Wall Street malfeasance and crises, prosecutions for financial crime are down 57.7 percent from twenty years ago. It also showed that the staffing for RMBS group is far below what existed for the Savings & Loan investigation and is roughly on par with the resources the Department of Justice dedicated to the investigation into whether Roger Clemens lied to Congress about steroid abuse.
The New Bottom Line, meanwhile, released a petition calling on the Attorney General to dedicate more resources to the task force. “Attorney General Holder is betraying the America public and Lady Justice herself by not putting the full investigation and staffing power at his disposal into this task force,” said Tracy Van Slyke of the New Bottom Line.
Polls show President Obama is vulnerable among independent voters in swing states on the issue of being too soft on Wall Street crime—69 percent of independent voters in Nevada, for example, hold that view.
The activists aim to make it a political necessity for Obama get the RMBS working group more resources—if the public is made aware that the investigation into financial crimes is being slow-walked, it would be a lot more difficult for Obama’s campaign to push the narrative that Mitt Romney is a protector of Wall Street. Said Van Slyke:
With this election season, underwater homeowners are now underwater voters. And with more than 15 million underwater homeowners, that’s a lot of voters. So the New Bottom Line is going to be engaging both the Obama and Romney campaigns in key swing states and targeted Congressional districts in a multi-layered online, media and on-the-ground campaign forcing the politicians to lay their cards on the table and really talk about what they’re going to do to deal with the housing crisis and our economy, and how they’re going to hold bank criminals responsible.
This new push is based on the premise that Holder is the key roadblock to RMBS progress, as reported by R.J. Eskow. David Dayen asks some smart questions here about whether targeting Holder deflects attention away from the very real possibility that the White House is fundamentally unwilling to hold banks accountable. Whether that is true or not, however, it seems to me that from a political organizing perspective, applying pressure to the White House and the Obama campaign is the best shot at rectifying the problem in either case.
I asked the organizers when they would conclude the resources weren’t coming, and would disengage from the task force and declare it a failure—a potentially huge embarassment to Obama. They answered that Labor Day was a meaningful tipping point relative to the election calendar, so we’ll see fairly soon whether the RMBS group gets more resources, and what the next move for activists will be.
UPDATE: The Department of Justice has responded to the new effort. In regards to comparing RMBS working group staffing levels to previous efforts, Adora Andy, a DoJ spokeswoman, said:
“This RMBS Working Group effort is focused on a narrow issue that was one of many factors that contributed to the financial crisis. This is a targeted strike, specifically examining whether those who originated the underlying loans and sold them to securitizers, as well as the actual underwriters and securitizers responsible for packaging and selling the RMBS offerings, made any false claim or other misrepresentation or omission regarding the ability and likelihood of the borrowers to repay their mortgage loans, the value of the collateralized property, and whether the underlying mortgage loans and properties complied with certain underwriting guidelines and standards. Right now, there are other active efforts underway by untold numbers of staff, at the Justice Department and in many other agencies, regarding many of the other illegal factors that contributed to the financial crisis.”
“More than 200 RMBS Working Group members are on the job, devoting significant resources to investigate and prosecute misconduct by financial institutions in the origination and securitization of mortgages. Work is being done right now by state andf ederal working group members on active investigations and while this work can be a time-consuming and challenging process, the resources, enthusiasm and organization brought by the members of the RMBS Working group have already resulted insubstantial strides toward that goal.”