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Methinks I see a squeeze play in the making, that President Obama’s "stern talking to" could have been a warning shot from a different direction while Congress works from another.
DailyKos diarist Badabing posted this morning that Sen. Carl Levin, chair of the Senate Permanent Committee on Investigations, has subpoenaed Goldman Sachs, Washington Mutual and more financial industry firms with regards to the financial meltdown. Note this key graf from WSJ excerpted in the DKos diary:
According to people familiar with the matter, the Senate Permanent Subcommittee on Investigations also has issued a subpoena to Washington Mutual Inc., a Seattle thrift that was seized by regulators in last year’s financial crisis and is now largely owned by J.P. Morgan Chase & Co. It appears likely that several other financial institutions also have received subpoenas. Subcommittee investigators declined to comment. A Goldman Sachs spokesman declined to comment on the subpoena. Deutsche Bank didn’t immediately respond to a request for comment.
Huh. Isn’t that interesting?
Especially when one considers that then Sen. Obama was a co-sponsor of legislation along with Sen. Levin on corporate transparency, also cited in the same DKos post.
Perhaps Levin is going to finally make some traction with the hope of getting a DOJ referral after other attempts to reveal the criminality of subprime lenders and their aides and abettors further upstream in the financial industry. He’s got better political headwinds this time, and a former fellow senator in the White House.
Goodness knows CBS’ 60 Minutes’ Steve Kroft and Scott Pelley tried to explain the problems in clear terms over the last year, but nobody in Congress or law enforcement picked up on it. (See below the list of 60 Minutes’ programs which featured all related stories on mortgage fraud and the financial instruments up the food chain which were based on the fraud.)
And Elliot Spitzer also tried his hand after ALL 50 states’ attorneys general were quashed by the White House when they tried to go after subprime mortgage fraud. We all know how that turned out after Spitzer called out the White House and Wall Street in his fateful WaPo op-ed, "Predatory Lenders’ Partner in Crime", published only weeks before another fateful article in the NYT, and weeks before Bear Stearns crashed.
Let’s hope Sen. Levin can get the dirt — it’s out there.
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House of Cards: how the U.S. sub-prime mortgage meltdown, in which risky loans drove a housing boom that went bust, is now roiling capital markets worldwide (Video, Feb. 26, 2009)
World Of Trouble: Three years before the housing market crash, Paul Bishop says he warned his superiors at World Savings that many of the mortgages they were granting were misleading and predatory. (Video, Feb. 19, 2009) [NOTE: This is the clearest statement of the amount of fraud involved. A must-watch.]
An Invitation To Fraud: Financial editor Jim Grant says that everyone got a cut in the subprime circle and many share the blame for the crisis. (Video, Feb. 9, 2009)
Credit Default Swaps: an examination of the complicated financial instruments known as credit default swaps and the central role they are playing in the unfolding economic crisis.(Video, Oct. 27, 2008)
Wall Street’s Shadow Market: a look at some of the arcane Wall Street financial instruments that have magnified the economic crisis. (Video, Oct. 5, 2008)
The U.S. Mortgage Meltdown: report on the U.S. sub-prime mortgage meltdown, in which risky loans drove a housing boom that went bust, and how this crisis is now roiling capital markets worldwide.(Video, May 25, 2008)
12 Comments
Nice job, Rayne. No time to read all of those links right now… hopefully later.
The links are to videos, unfortunately, so you’ll have to plan on time to watch.
The most important one, though, is the “World of Trouble” piece. It’s clear that the banksters were committing fraud.
“It’s clear that the Banksters were committing fraud.” – Rayne
Yep, if they can get honest testimony out of WaMu Execs and others, people are going to Jail …
I linked to the World of Trouble piece a while ago in a post Jane had up regarding the Action Alert on finance transparency but no one seemed impacted by the Paul Bishop interview at the time.
I hope more people will take the time to look at it.
Thanks for catching this action by Levin and for providing the links.
Thanks, klynn. Yeah, that piece featuring Bishop was a stunner. I remember watching it on 60 Minutes that evening thinking, “Wow, this is the kind of reporting which should get a Pulitzer.” And of course, nada.
But as you can see from the list of pieces by 60 Minutes, Kroft and Pelley have actually been doing a bang-up job of constructing an arc of stories which explain the link from the subprime mortgage fraud to the credit market plummet and the ensuing economic crash. Given just how crappy mainstream media has been for over a decade, I’m surprised they’ve been able to hammer away at this so consistently (there are more pieces they’ve done which fit in the arc, but the ones I list are the closest fit to Obama’s “stern talking to” and Levin’s inquiry).
This is a great post. Thank you and recommended.
Yeah, nice job indeed. Getting this info out there is a start.
Thanks, Rayne. Lots of very useful information here. Blatant crime right under our noses, and the gummint just says “move along, nothing to see here”. I wish I felt like I could trust Levin on this one, but I’m just not sure…
Here Jim, you’ll see that Levin has been doing a great job with the Senate Permanent Subcommittee on Investigations.
The most obvious work he’s done has been on oil and energy prices, specifically with regard to speculation, both in the subcommittee and with legislation last year, co-sponsored with Diane Feinstein, which when passed almost immediately caused fuel prices to plummet. I had a chance to speak with Levin late last spring about this legislation and knew he was taking the problem seriously.
I think a big challenge for Levin is that he hasn’t gotten the level of support his work merits in terms of new legislation created in response to investigative outcomes — see the offshore tax shelter problem, for example — and follow-up by the USDOJ where appropriate. But much of this could be related to the former Bush administration, and a nominal majority in Congress (which is not adequate, as we can see with health care reform).
Rayne–
Thanks! Great post. Recommended.
About time the spotlight gets turned on fraud in these cases. I hope we get some high level indictments out of this.
Bob in HI
I hope they ask about subprime lending to poor people, uneducated people, and dark people. I also want the MSM to ask in Jon McCain will get in a few questions about ACORN.
I want that GOP talking point about ACORN and poor, dark, uneducated people causing the housing crisis stopped.
When a lender gives you a loan you can afford to make payments on how is that not loan sharking.
It was a two-fer. It wasn’t just that they targeted a market segment with fraudulent subprime loans which were most likely to fail.
The persons who stood to gain the most financially were trying to use the data they gathered against these same people to try and disenfranchise them as voters.
Remember the “voter foreclosure” story last year, in which a local Republican Party official admitted they were going to use foreclosure lists to contest voters at the polls?
The largest mortgage servicing firm in state was also a Republican bundler, “rented” office space to McCain’s campaign, and donated money to Republicans on the banking services committees in state and at federal level, too. Was also the “preferred vendor” for Fannie Mae and Freddie Mac, have it on good authority they spent $$ entertaining folks from the same regularly. Same firm also owned the largest legal notices newspaper in state, through which a substantive number of foreclosure notices would have been filed.
Surely no relationship between the “voter foreclosure” story and the actions of the mortgage servicing company, right?