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Mike Lux

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A New Strategy for Wall Street Accountability

Posted: 02/15/2012 5:33 pm

One of the things progressive activists always need to be careful of is letting down after a big fight comes to a conclusion. With the banking settlement finished, one phase of the fight for Wall Street accountability is over, but now we enter an even more important next phase. And whether you viewed the settlement as a win, a defeat, or (like me), some of both, progressives who want big bank accountability and a better financial system in this country need to unite as we move into this new phase.
There are four major things our side needs to simultaneously develop long term strategies around:

1. Holding the settlement accountable. This settlement, like many before it, relies in part on promises by the big banks to stop breaking the law in the future. In many past settlements with the SEC and Attorneys general, banks have made those promises only to quickly start breaking the promises- and the law- all over again. Enforcement of these banker promises is critical. In addition, these banks have promised to write down mortgages over the next 3 years, but we have also seen big banks ignore these kinds of promises before. Those of us who care about holding Wall Street accountable need to make sure the banks aren't ignoring the promises they made, and we need to make sure our government is enforcing this agreement.

2. Getting Fannie and Freddie involved in mortgage write-down. Even if all of our other political, grassroots organizing, and legal strategies work in terms of getting the big banks to write down mortgages, we still won't solve the housing crisis in this country without forcing Fannie Mae and Freddie Mac to the mortgage write-down table. They are acting completely irresponsibly in this area and are totally putting the screws to homeowners. Remember, Fannie and Freddie are controlled by our government. Acting administrator Edward DeMarco, appointed by Obama, has become the single biggest barrier to improving the nation's housing market because of his bull-headed and stunningly narrow minded approach to mortgage write-downs. President Obama needs to use a recess appointment to appoint a new administrator, and if he doesn't, progressive Attorneys general like Schneiderman shouldn't hesitate to sue Fannie and Freddie to force change in their behavior. This is a very big deal, and activists need to be very focused on going after DeMarco, and going after Obama to use a recess appointment.

3. Pushing hard for more staff resources for the new financial fraud task force. The fact that the President appointed this new task force, and made Schneiderman a co-chair (and from what I have heard from the White House, he is clearly designated as first among equals on driving the task force forward) is a wonderful thing. But as many people have pointed out, the resources allocated do not measure up to what they need to: big banks have legal teams in the thousands to fend off their pursuers. The good news is that many different agencies (including the IRS, whose agents don't mess around), and a number of different state Attorneys general, are contributing staff to this operation. I am also very confident that Schneiderman will walk away if he is not getting the help he needs from the Feds, and am heartened by the new Justice Department budget which shows them shifting more resources the task force' way. But there is no doubt it will be better all the way around if the task force is given every last staffer the Department of Justice can spare. We need to keep pushing for more.

4. No roadblocks for the task force. The biggest thing that could hold up the financial fraud task force is bureaucratic roadblocks placed in front of Schneiderman and others who want to push the investigation forward. Some of these roadblocks might be the typical governmental/jurisdictional issues that sometimes crop up. Some of them might be intentionally placed in the way by people who want to help the banks. Progressives have to watch this like hawks, and fight back against it whenever it crops up, and for whatever reason it crops up. Every delay on this task force is a defeat for us, because every bit of forward movement puts more pressure on the big banks.

This is a lot of work, and will take a sustained and dedicated effort, but it is worth doing it because the stakes are very high. If the task force doesn't produce, if the settlement isn't enforced, if Fannie and Freddie keep screwing homeowners mercilessly, it is terrible news. It is terrible for our economy, because the centrally important housing market will be stuck in a black hole without progress on all these things. And it is terrible for justice and our democracy, because it will show that once again the biggest banks do not have to live by the rule of law.
Coalitions like the Campaign for a Fair Settlement and the New Bottom Line campaign have done a great job in driving these banking and housing issues forward. Working together, we all need to figure out how to sustain the pressure in these four crucial areas, and to keep the media spotlight firmly affixed to the fundamental notion of accountability for Wall Street.

 

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