It’s been almost three months since President Obama announced the formation of the Residential Mortgage Backed Securities working group, a federal investigation into Wall Street malfeasance leading up to the financial crisis. After an early flurry of subpoenas, the group has been quiet—and progressives have begun to question whether it’s doing anything at all. But top officials from the office of New York Attorney General Eric Schneiderman, a co-chair of the group, and the Department of Justice are now pushing back against claims that the task force lacks staffing and resources.
Yesterday, the New York Daily News ran an op-ed from the co-directors of the Metro Industrial Areas Foundation, a coalition of citizens groups pushing for fair housing policies. The authors called on New York Attorney General Eric Schneiderman, a co-chair of the group, to submit a noble resignation because they believe the task force is essentially inactive.
Citing two recent informal conversations with Schneiderman in which they say he told them there was no staff for the investigation and also an inability to locate an actual office for the RMBS working group, the authors write the task force is “a public relations coup for the White House and the banks” that has shown “little or no concrete action.” This echoes a recent alert from CREDO Action, which said the task force never received promised staffing from the Department of Justice.
I reached out to Schneiderman’s office in New York for a response, and it strongly disputed the notion the task force wasn’t active. “Given most investigatory matters are privileged and confidential, it is simply premature to draw conclusions about the Working Group’s scope and scale of inquiry,” said Danny Kanner, Schneiderman’s spokesman. “Op-eds and e-mail appeals from activists, while important contributions to the dialogue, do not constitute fact.”
Kanner said fifty attorneys, investigators and analysts across the country are already working on the task force and that hiring would continue as investigations progressed. He added that the offices of several state attorneys general are also coordinating with the working group.
A Department of Justice official confirmed those staffing numbers, and said that ten US Attorney offices were part of the effort and that more were expected to join as the investigations progress. The Department of Justice has also asked Congress for $55 million to expand staffing.
Finally, both Kanner and the Department of Justice said that the five co-chairs of the task force meet formally on a weekly basis and talk daily. This squares with what Richard Cordray, head of the Consumer Financial Protection Bureau told me last month—he said he “talks frequently” with Schneiderman about the investigation. Cordray is not a co-chair, though the CFPB is expected to play a potentially large role in the investigation.
The authors of the Daily News piece concluded there was no headquarters for the working group because the Department of Justice switchboard couldn’t connect them. Since the investigation is spread out across US Attorney offices and state attorney general offices across the country—and since the five co-chairs are located in Washington, New York and Colorado—it’s a bit misleading to talk of a central office space, but I was also not able to locate a distinct headquarters for the working group.
I was also not able to confirm with any of the several officials I spoke with that the RMBS working group has an executive director, though I was told by a Justice official that the task force would make “specific staffing announcements in the near future.”
Progressive activists have voiced concern that, without a coordinator, the task force may lack direction. “I’ve become convinced over time that…someone needs to crack the whip. Someone needs to drive this and take responsibly for making things happen,” said Mike Lux, a progressive strategist and former Clinton White House staffer. “If you don’t have somebody like that in a multi-head task force, things can too easily drift. Different people can throw up hurdles that can’t easily be removed.”
Lux, who has played a key role in the push for a more aggressive investigation, said he was heartened that the task force is active, but that more is needed. “You still have too few staff people chasing a very, very huge problem and dealing with thousands of lawyers on the other side,” he said.
He added that ultimately, the proof will be in the results—which cannot be spun. “You can’t have an exact timeline on a task force like this. But if we don’t see some really serious action happening in the weeks to come, if we haven’t seen more subpoenas and depositions and possibly even indictments by the summer, I think we know the answer—that this thing isn’t moving,” Lux said. “If that’s what’s going on, I hope Eric [Schneiderman] would call the bluff and resign. But I’m still hopeful.”