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Danny Schechter
Danny Schechter
News Dissector Danny Schechter edits Mediachannel1.org. He is the author of The Crime of Our Time.
Will Obama go after Wall Street criminals?
The latest crackdown on fraud by the Obama administration may itself be a fraud.
Last Modified: 30 Jan 2012 14:28
A new financial crimes unit and mortgage fraud crackdown has been announced, but will it be enough? [GALLO/GETTY]

New York, NY - Like all State of the Union speeches, there was something in it for everyone.

For the patriotically correct, when it bleeds, it leads.

President Obama led his annual SOTU "report" with blood lust by bragging about how he nailed Bin Laden and sends the drones out to bag more feared terrorists than any President ever. 

Go America, Repeat After Me, We're #1!

For the military brass, there was endless pandering about their greatness and how we all need to follow their medalled chests to glory. Never mind the quagmire in Afghanistan.

Go Pentagon Forever!

 US foreclosures under scrutiny

For labour, there was lots of talk - there is always talk - about generating more jobs, even as unemployment stays high and remains seemingly intractable.

Go Workers: Maybe You Will Work Again!

For business, there was more talk about high tech and incentives to manufacture more in the USA.

Go Business: Do We Have Tax Breaks For You!

For Republicans, there were more outreached hands and an admission that some of his proposals were based on their ideas. The hopes for non-partisanship die hard.

Go GOP: Can't We Just Get Along?

And for disenchanted progressives, more turned on by the Occupy Movement than the Obama re-election effort, and who have been bugging him lately for some action against Wall Street, there was finally talk of a new financial crimes unit and mortgage fraud crackdown even though task forces that have done little have existed for years.

MoveOn Email #1 Last Week:

MoveOn is ramping up their campaign demanding that the president order a federal investigation into Wall Street's involvement in the foreclosure crisis, and oppose a sweetheart deal that would give them immunity from investigation.

MoveOn Email #2 This Week:

President Obama did exactly what hundreds of thousands of us have been calling on him to do - he announced a federal investigation into Wall Street. Here's what he said:

'I am asking my Attorney General to create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans...'

The best part is, progressive champion New York Attorney General Eric Schneiderman is co-chairing the investigation and will make sure it stays on track.

Activists were surprised when the President did not even mention Schneiderman's name, even as he was there sitting behind his wife. He was publicly named later.

"Anyone recall the president appointing Elizabeth Warren as a special assistant before he didn't appoint her to head the consumer protection bureau she championed?"

Anyone recall the president appointing Elizabeth Warren as a special assistant before he didn't appoint her to head the consumer protection bureau she championed?

This is all symbolic politics, including a practiced manoeuvre called "progressive-seduction", accompanied by Treasury Secretary Tim Geithner saying he will be going, even though when he was about to leave last year, he was pressed by Obama to stay.

But thank heaven for small favours: At last, the financial crimes issue has finally been raised prominently (Even if MoveOn did not embrace it when I brought it to them 3 years ago, asking for help in distributing my film Plunder on Financial Crime, I guess I was "premature". That was well before the President hit the campaign trail again.)

The journalists who have been reporting on the issue most closely are also the most sceptical about the announced - if belated - crackdown, in part because Attorney General Holder and his chief deputy both come from law firms that represented big banks at the height of their sleaziest business practices and have shown little enthusiasm.

Writes Yves Smith on NakedCapitalism.com:

While a large number of 'liberal' groups, ranging from the official Democratic party outlets (the Centre for American Progress) to ones that sometimes cross swords with the administration (MoveOn, the Working Families Party) praised the Tuesday evening announcement of mortgage 'investigations' with Schneiderman co-chairing the effort, others who have been watching the mortgage legal fight closely were far more ambivalent about the creation of a new unit in an initiative... which has done pretty much nothing since its creation in 2009.

Smith was referencing this article in the New York Times:

There is good reason to be skeptical. To date, federal civil suits over mortgage wrongdoing have been narrowly focused and, at best, ended with settlements and fines that are a fraction of the profits made during the bubble. There have been no criminal prosecutions against major players...

There are reasons to be wary... The Times identified the two red flags. First, why are the settlement talks still proceeding? This is ridiculous if the plan is to do investigations. The fact that they have not been halted calls this exercise into question. Second, if this is supposed to be a heavyweight investigation, why hasn't Obama set up an independent prosecutor, a role much more likely to attract the sort of kick-ass litigator that the Times correctly thinks is necessary for the job?

A later Times story explained that many of the administration's highly publicised housing relief programmes - a GOP Senator called them a "press release collection agency" - were stunningly ineffective. In times, they met with "limited success". Many of the cases against major fraudsters are now considered "cold" (ie unprosecutable).

 Obama delivers populist speech

These cases invariably pit the human rights of homeowners against the property rights of big lenders. Who do you think is winning?

Perhaps, that's why Common Dreams carried an article, suggesting that this latest crackdown on fraud may itself be a fraud:

The 'investigation' announcement came just as a bank-friendly 'settlement' is about to be announced by the state attorney generals. Reports of the settlement talks, the 'too-big-to-fail' banks - Bank of America, Wells Fargo & Co, JPMorgan Chase & Co, Citigroup and Ally Financial Inc - would provide $20bn to $25bn of 'relief' to homeowners in exchange for being exempted from lawsuits for improper foreclosures and abuses in mortgage loans.

The findings of the new 'investigation' would come after the settlement gives the banks a get-out-of-jail-free card.

So a word to the wise, watch what the administration does, not just what it says.

Remember, as Obama hits the political hustings reborn as a "populist", in a political environment energised by Occupy Wall Street, his "bundlers" are still pressing the flesh on Wall Street, seeking a new round of political donations.

How far will these one per cent donors let him go?

News Dissector Danny Schechter writes the newdissector.com blog. He made the film Plunder about financial crimes (Plunder the Crime of Our Time,) His latest book is Occupy: Dissecting Occupy Wall Street. Comments to: dissector@mediachannel.org.

Follow him on Twitter: @dissectorevents

The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy.

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