News Release

New Report: Federal Government is Not Showing Leadership on Prosecuting Bankers

Liz Rose — Tue, 04 Sep 2012 09:45:30 -0400

Washington, DC -- The Institute for America's Future just released a new report by Bart Dzivi, former Special Counsel to the Financial Crisis Inquiry Commission, focusing on the federal government's legal response to the financial crisis and the particularly the statutes of limitations available to bring legal claims against financial institutions for their role in the crisis:

The report, Rhetoric or Resources: it's Time To Get Serious, is one of the first detailed examinations of the Administration's process on prosecuting financial crimes, and assessments of how legal statutes could preclude prosecutions. There are some serious concerns that the window of opportunity is closing to bring legal claims against financial institutions and their employees for their role in the crisis. (See Sunday's New York Times editorial, "Still No Justice For Mortgage Abuses.")

In "Rhetoric or Resources," Dzivi argues that the federal government has so far failed to show the leadership needed to address the fraud that led to the economic crisis that began in 2008. Instead, there is a lack of resources, weak oversight and poor coordination among agencies. Perhaps most important, the government’s work “lacks a sense of urgency,” despite the fact that the statues of limitations are expiring for many potential claims.

The report examines:
• How the behavior of many senior managers leading to the financial crisis likely goes “beyond simple greed to criminality.”
• Avenues for legal claims of fraud in the sale of MBS and CDOs
• Federal regulators’ pursuit of the wrong “small fry” individuals who “are not the actors who brought this country to its knees”
• The government’s more aggressive approach in the savings & loan crisis, which resulted in prison time for 3,700 insiders and executives
• Statutes of limitations for crisis-related lawsuits
• Why fines against financial institutions that amount to “decimal dust” must be increased
• Why the Residential Mortgage Backed Securities Task Force urgently needs more resources.

Rhetoric or Resources is available online: http://www.ourfuture.org/report/prosecuting-lawless-bankers

About Bart Dzivi:
Bart Dzivi is an attorney with more than 25 years of experience representing financial institutions and corporations on complex financial matters. Mr. Dzivi served as Special Counsel to the Financial Crisis Inquiry Commission in 2009 and 2010, advising the Chairman on the Commission's operations and assisting in investigations of major financial institutions and banking agencies. During the 1980s savings and loan crisis, Dzivi served as as counsel for the Federal Home Loan Bank, where he handled enforcement matters and supervised investigative auditors. Previously he was counsel to the U.S. Senate Banking Committee, where he organized investigative hearings on savings and loan issues.

The Institute for America’s Future is a center of nonpartisan research and education devoted to shaping a compelling progressive agenda and message. The education arm of the Campaign for America's Future works to foster new thinking and bold reforms on such kitchen-table concerns as the availability of good jobs, affordable health care, accessible higher education, retirement security, improved public infrastructure, living wages, healthy workplaces, safe food, fair trade and clean energy.

JP Morgan’s Risky Misdeeds Demonstrate that Banks are Too Big to Fail:

Liz Rose — Mon, 14 May 2012 14:12:14 -0400

Washington, DC – Campaign for America’s Future’s co-director Robert Borosage said that the recently announced losses by J.P. Morgan Chase are yet another demonstration of the danger of banks and investment houses that are too big to fail.

Borosage urges Senators to support legislation introduced by Sen. Sherrod Brown (D-OH) that would protect American taxpayers by placing sensible size and leverage limits on America’s largest financial institutions. The Safe, Accountable, Fair & Efficient (SAFE) Banking Act of 2012, would hold Wall Street accountable, prevent future bailouts, and protect American homes, jobs, pensions, and businesses.

“The recent J.P. Morgan Chase debacle proves that financial markets do not self-regulate. They are given to excesses and to crackups. When banks are so big they assume government will bail them out, the excesses can be catastrophes. It’s time for the government to place sensible limits on the big banks,” said Borosage, “Sen. Brown’s SAFE bill is a good first step in insuring that banks are not too big to fail."

Borosage added that with the nation’s six largest Wall Street banks controlling assets equal to 64 percent of U.S. GDP; the time for this safeguarding legislation is now.

Sen. Brown is the Chairman of the Senate Banking Subcommittee on Financial Institutions and Consumer Protection; he introduced similar legislation in 2010.

Geithner Remark Calls Into Question Administration's Commitment to Mortgage Fraud Investigations and Prosecutions

Liz Rose — Thu, 26 Apr 2012 11:20:38 -0400

Washington, DC -- In remarks yesterday to the Portland City Club, Treasury Secretary Tim Geithner was asked why there aren't more criminal prosecutions moving to hold executives accountable for the financial and mortgage crisis. Geithner, in revealing comments, said that "You cannot legislate away stupidity and recklessness and greed," adding, according to Reuters and The Oregonian, that holding people accountable for the wreckage caused by the recent housing collapse and the ensuing financial meltdown was not that simple since most crises were not caused by criminal activity.

This goes against extensive and growing public evidence of criminal wrongdoing, from the Countrywide scandal to the Missouri AG case – and contradicts the President's own insistence on criminal accountability for the foreclosure crisis.

"At a moment where not one single executive has been held accountable for the foreclosure crisis, with legal investigations moving forward and compelling public evidence of what the FBI called `an epidemic of fraud’ it is stunning for the President's top-ranking economic official to dismiss the idea of criminal wrongdoing" said Robert L. Borosage, of Campaign for America's Future. "America's 11 million underwater homeowners, as well as the small business owners struggling on Main Street are waiting to see who will be held accountable and when."

"The President promised that his administration would aggressively prosecute financial crimes related to the housing crisis," said Brian Kettenring, of the Campaign for a Fair Settlement. "Geither needs to explain, on the record, the Obama administration's commitment to prosecutions given these comments. If the Secretary of the Treasury is willing to ignore and excuse illegal behavior, how committed is this administration to accountability for the foreclosure crisis?"

From Reuters:
http://www.huffingtonpost.com/2012/04/25/timothy-geithner-wheels-justice-turning-now_n_1454235.html

From The Oregonian:
http://www.oregonlive.com/business/index.ssf/2012/04/in_portland_speech_tim_geithne.html

Audio from Geithner's talk should be posted here shortly:
http://www.opb.org/thinkoutloud/shows/130-pm-special-timothy-geithner/

Bank Deal: A Beginning, Not an End

Liz Rose — Thu, 09 Feb 2012 10:08:17 -0500

Washington, DC – Robert Borosage, co-director of the Campaign for America’s Future, commented on the much-anticipated settlement deal with the banks regarding mortgage fraud. Borosage expresses concerns that the deal was cut before the Federal investigation of the crimes committed. He urges Americans to continue to press for an aggressive investigation. Borosage said, “The real question is whether the federal investigation will finally turn over all the cards so we know just how bad a hand the banks are holding. Only then is there a possibility for real accountability – and real relief for homeowners.”

Statement from Robert Borosage:

“The bank settlement of $25 billion over three years from five major banks for robo-signing forgeries is being hailed in Washington and scoured by leading bank critics. I’m reminded of Groucho Marx who said upon being invited to join a country club: ‘I wouldn’t want to belong to any club that would have me.’ Similarly, it is hard not to be suspicious of any deal that the banks would sign.

"But the deal should be seen for what it is – a relatively small ante by the banks handed out before the real cards are seen.

"What’s clear is that the banks trampled the law in their wilding while blowing up the housing bubble. They abused homeowners, committed routine forgery and perjury before the courts, and defrauded investors. The housing market then collapsed, leaving homeowners about $700 billion under water (owing that much more on their mortgages than their houses are worth).

"The banks are looking for a deal that will relieve them of untold criminal and civil liabilities. Untold is the right word because, outrageously, there has been no real investigation into the scope of their crimes. The state attorneys general simply don’t have the resources. The federal government does, but once the administration decided to continue President George W. Bush’s policies of bailing out the banks without reorganizing them, it has been committed to keeping insolvent banks afloat, not holding them accountable.

"So the administration and some state attorneys general started pushing a deal that would relieve the banks of immunity. Some courageous attorneys general – Eric Schneiderman of New York, Beau Biden of Delaware, Catherine Cortez-Masto of Nevada, Martha Coakley of Massachusetts, Kamala Harris of California and others – held out. Schneiderman led the effort to limit the scope of immunity offered the banks, expand the settlement, and force the administration to launch a real investigation at the federal level.

"So this deal is the result. It gets a relatively small sum from the banks in exchange for limited immunity on their flagrantly illegal robo-signing – or forgery – of mortgage documents. The money will provide homeowners with the possibility of real legal assistance and small amounts of relief. No private rights of action have been waived. The suit brought by Schneiderman against Mortgage Electronic Registration Systems, or MERS – the bank creation that simply trampled hundreds of years of property laws – continues, and other state attorneys general should follow suit. Schneiderman now co-chairs a federal task force charged with doing a real investigation that could result in a serious settlement.

"The deal has been cut before the investigation so it is suspect on its face, but limited in its scope. Whether it will be enforced adequately remains to be seen. How homeowners benefit will differ from state to state.

"The real question isn’t this ante. The real question is whether the federal investigation will finally turn over all the cards so we know just how bad a hand the banks are holding. Only then is there a possibility for real accountability – and real relief for homeowners.

“So this settlement must be the beginning, not the end. We have to sustain pressure on the administration for an aggressive investigation. State criminal and civil suits, individual and investor relief have to continue. We are a far remove from achieving the justice and accountability that are due.”

Campaign for America’s Future Applauds Schneiderman’s Lawsuit of the Big Banks to Address Mortgage Abuses

Liz Rose — Fri, 03 Feb 2012 13:36:04 -0500

Washington, DC – The Campaign for America’s Future welcomes the announcement that New York Attorney General Eric Schneiderman has initiated a lawsuit against the Bank of America, J.P. Morgan Chase, and Wells Fargo regarding their use of “MERS.”

Statement from Richard Eskow, Senior Fellow at the Campaign for America’s Future:

“We welcome the announcement by New York Attorney General Eric Schneiderman that his office has initiated a lawsuit against Bank of America, J.P. Morgan Chase, and Wells Fargo regarding their banks' use of “MERS.” As the Campaign for America's Future reported in October of 2010, “MERS’ is a shell corporation that has been widely used to avoid paying registration fees or filing title information with local authorities when mortgages are bought, sold, or traded.’

“Banks were able to avoid revealing the true holder of a mortgage note by holding them in the name of the MERS Corporation, then appointing its own employees as `officers’ of that corporation for court filings. This legal fiction resulted in a situation in which a company with less than fifty employees had thousands of vice presidents and assistant secretaries, as a MERS executive acknowledged in a deposition.

“MERS has made a mockery of longstanding legal principles, including the right of states and municipalities to collect taxes and record property holders and the right of borrowers to know and communicate with the holder of their loan. MERS also played a central role in the bundling and selling of mortgage-backed securities without proper review or disclosure, a process that led to the financial crisis of 2008. This feature was advertised in the company's materials as `ease of delivery into secondary markets.’

“Our review of internal MERS documents showed that some of the features, which the organization featured in its advertising materials resemble, at least superficially, some of the allegations in Mr. Schneiderman's lawsuit. `No recording or re-recording of documents,’ read one sales slide. `No chain-of-title issues.’ Other materials note that MERS allows its users to avoid paying local taxes.

“In a reflection of the corporate culture reflected by the organization, a dummy computer screen used to train its staff features a fictional borrower named `Harry Homeowner’ residing at `One Poverty Lane’ in foreclosure-plagued Jacksonville, Florida. The tragedy faced by millions of Americans appears to have been a source of humor for the staff, management, and thousands of artificial `officers’ of the MERS Corporation.

“There can be no resolution of our nation's ongoing mortgage crisis without aggressive action to address MERS abuses and the executive actions that lay behind them. The American people deserve justice, and they deserve to know more about the abuses that created a financial disaster for millions of people while unjustly enriching a few.

“We welcome this lawsuit. We applaud Mr. Schneiderman and his staff for their efforts on behalf of New York state residents and bank customers throughout the nation.”

# # #

President Obama Announces Banks Will Not Escape Investigation and Prosecution

Liz Rose — Tue, 24 Jan 2012 22:50:11 -0500

Washington, D.C. -- Robert Borosage, co-director of the Campaign for America's Future, lauded President Barack Obama's announcement that he is launching an investigation of the big banks on mortgage-related fraud. Hundreds of thousands of concerned Americans signed petitions that went to the President asking for this investigation. This is a victory for those activists and for the American people.

Statement from Robert L. Borosage, co-director of the Campaign for America's Future:

“After months of troubling rumors that the White House was urging state attorneys generals to hold banks blameless - and after months of protests by concerned Americans - the President is doing the right thing by announcing an investigation of the big banks. We hope news reports are true that he is putting Attorney General Schneiderman in charge of the investigation. It would demonstrate he is serious about investigating the banks.

“Americans from across the political spectrum are angry that the Wall Street banks blew up the economy and got bailed out, while homeowners and taxpayers were stuck with the bill. The bankers that put this economy at risk and hurt millions of homeowners need to be held accountable.

“Hundreds of thousands of concerned Americans signed petitions that went to the President asking for this investigation. This is a victory for those activists and for the American people."

“What the people want is clear: Penalize the perpetrators, not their victims. Any settlement must have sufficient scope to deal with the scale of the problem.

“It is vital to this country that the banks are made accountable. It is vital that they do not see the law as simply a minor price of doing profitable business, a speed bump on the way to their bonuses. Tonight the President announced a strong step towards the accountability that we need.

“I want to laud President Obama for starting this investigation. And we hope that news reports are true that he plans to choose Attorney General Schneiderman - who has bravely refused to accept a deal that protected the banks from prosecution -- to lead this investigation into the foreclosure crisis. His appointment to lead the Justice Department investigation would put a champion in charge - and would the whole effort tremendous credibility."

No Sweetheart Deal For Big Banks

Liz Rose — Wed, 18 Jan 2012 17:11:23 -0500

Washington, DC – Progressive groups are uniting today to send a strong message to the White House that bankers who commit fraud ought to be investigated, prosecuted and sent to jail. The Campaign for America’s Future and MoveOn, Credo, Progressives United, New Bottom Line, and Color of Change are working together to deliver more than 360,000 petitions to the White House and to the Chicago offices of Obama for America. The petition asks the President not to let the banks off the hook: No Deals. Investigate. Prosecute.

“Obama administration officials have been trying to pressure state attorneys general to cut a deal with bankers who broke the law and devastated the economy,” said Roger Hickey, co-director of the Campaign for America’s Future. “It’s clear from the overwhelming response to this petition drive that the public wants to see bankers who hurt the U.S. economy investigated and prosecuted to the fullest extent of the law.”

Link to Campaign for America’s Future’s Petition: Don't let banks off the hook. No deals. Investigate. Prosecute

Petition to President Obama:

“We the undersigned urge you, President Obama, to launch an immediate investigation into what the FBI warned was an “epidemic of fraud” that contributed to the housing crisis and threw millions out of their homes. The proposed sweetheart deal that would prevent such an investigation from taking place should be stopped. It is vital that the laws be enforced, that those who broke the law be held accountable – or else Wall Street bankers will feel free to defraud people in the future.”

Articles by Campaign for America's Future's co-director Robert L. Borosage: No Sweetheart Deals for Big Banks
and by Senior Fellow Richard Eskow: New Bank Deal Still Unfair

Will the President Pass the Warren Test?

Liz Rose — Thu, 09 Jun 2011 11:46:49 -0400

Washington, DC – Robert Borosage, co-director of the Campaign for America’s Future, asked President Obama to appoint Elizabeth Warren to head the Consumer Financial Protection Bureau and called his efforts to push for the Warren appointment a litmus test for progressives and for consumers.

Statement from Robert Borosage:
“It really is very simple.

“Will the President name the best leader -- Elizabeth Warren -- to head the Consumer Financial Protection Bureau? Nominate her. Challenge the Senate Republican threat to filibuster her (or any) nomination. And if a minority blocks her confirmation, name her in a recess appointment.

“But Warren's opposition comes not only from Senate Republicans, eager to curry favor with the big banks. It comes, by all reports, from Treasury Secretary Tim Geithner, ever solicitous of Wall Street's concerns. And this White House is ever more ready to switch than fight. So now the administration is floating the notion that it will name a Warren deputy to head the bureau. http://is.gd/a5VB7i [1]

“This trial balloon won't get off the ground. Every consumer activist, every informed citizen, an army of commentators, bloggers, organizers and opinion leaders will be simply outraged if Elizabeth Warren is not nominated to head the bureau that she conceived, championed and constructed.

“The Warren test cannot be ducked. If the president names someone else, he gets the worst of both worlds. The Republicans will still block the nomination, demanding that the bureau be neutered. And the White House will be savaged across the progressive community for demonstrating once more that it caters far more to bankers than to the customers who are too often their victims.

“It really is simple. Name the best person to the job. Take on the fight. Help Americans understand who is on their side. No excuses. No dodges. There are no acceptable alternatives. Elizabeth Warren has demonstrated her leadership, her independence, her loyalty. This is not a hard test.”

To sign a petition protesting the obstruction of the Warren appointment visit: www.ourfuture.org/warren

Campaign for America’s Future Urges the President to Appoint Elizabeth Warren

Liz Rose — Thu, 19 May 2011 17:52:20 -0400

Washington, DC – The Campaign for America’s Future and its supporters are urging President Obama to appoint Elizabeth Warren to the Consumer Financial Protection Bureau (CFPB) when the Senate recesses at the end of the month.

“There is only one person who should lead the Consumer Financial Protection Bureau,” said Robert Borosage, co-director of the Campaign for America’s Future, "and that is the brilliant advocate who championed it, the remarkable administrator who has helped get it off the ground, and the middle class champion who will make it work – Elizabeth Warren.”

The law states that the new head must be in place by July. Senate Republicans have now pledged to block any nominee unless the Bureau is weakened dramatically. The minority in the Senate is saying that they will hold any nominee hostage unless the law passed by both Houses of Congress and signed by the President is changed to their specifications.

“The president should stand up to this outrageous extortion” said Borosage,” He has the power to make a recess appointment when the Senate goes out of session at the end of this month. He should use that power to appoint Elizabeth Warren, a true champion of working families to head up the agency. It is time to act.”

Over the past months, Elizabeth Warren has dazzled Washington with her leadership capacities. She has proved her value as an advocate and as an administrator. She has shown responsible bankers that she is sensitive to their concerns. At the same time, she has demonstrated the value of a true champion of working families heading up the only financial bureau dedicated to the protection of consumers.

Wall Street’s lobbyists have tried to block, cripple and delay the establishment of this bureau from the start. Now the Republican minority has joined that effort.

But the CFPB is a vital centerpiece of financial reform. And Elizabeth Warren has demonstrated how invaluable she will be in leading the new bureau.

“The President should not and need not bow to those who want to gut the reforms that have just been passed. It is time to act. Since Republicans have made it clear that no nominee will gain approval, the President need not wait. A recess appointment is both necessary and sensible. It is time to act.”

Borosage lauded Rep. Carolyn Maloney (D-NY), Rep. Keith Ellison (D-MN) and Rep. Brad Miller (D-NC) for leading the effort to advocate for a recess appointment for Warren.

Link to the petition to urge President Obama to appoint Elizabeth Warren: www.ourfuture.org/warren

New Report To Outline The Depth And Breadth Of The Financial Lobby Revolving Door

Isaiah J. Poole — Mon, 10 May 2010 09:07:17 -0400

A new report to be jointly released by the Service Employees International Union, Campaign for America’s Future and the Public Accountability Initiative will provide the most in-depth view yet into the vast depth and reach that financial services lobbyists have in Washington.

The report will be released and discussed on a press call at 11 a.m. Tuesday, May 11. Click here for a copy of the report.

The report, researched by the Public Accountability Initiative, will show that the six largest banks and their trade associations have spent close to $600 million since the first major federal bailout of Bear Stearns in March 2008 on lobbying, trade association activity and political contributions. In addition, 243 lobbyists for these six big banks and their trade associations used to work in the federal government —202 in Congress, the rest in the White House, Treasury or at a relevant federal government agency.

In addition to releasing the report, George Goehl from National People’s Action will be on the call to preview a series of demonstrations taking place across Washington, D.C. on May 17 targeting Wall Street and corporate lobbyists.

Who:

Bob Borosage, Co-Director, Campaign for America’s Future
Stephen Lerner, Director, Service Employees International Union’s Banking and Finance Campaign
Kevin Connor, Co-Director, Public Accountability Initiative
George Goehl, Executive Director, National People’s Action

What:

National Press Call

Where:

Contact Eliza Brinkmeyer or Gena Madow, (202) 822-5200, for call-in details. For credentialed media and bloggers only.

When:

11 a.m. Tuesday, May 11