Monday, February 13, 2012

Banksters' Big Win In Robosigning Scandal: Were America's Prosecutors Outgunned, Wilting Before Prospect Of Battling High-Priced, White Shoe Lawyers?

Rolling Stone columnist Matt Taibbi writes:

  • So the foreclosure settlement is through. A few weeks back, I was optimistic about it – I had been worried that it was going to contain broad liability waivers for all sorts of activities, and I was pleasantly surprised when I heard that its scope had essentially been narrowed to robosigning offenses.(1)

  • However, now that the settlement is finalized, and I've had time to think about it and talk to people who know far more than I do about this, I'm feeling pretty queasy.

  • It feels an awful lot like what happened here is the nation's criminal justice honchos collectively realized that a thorough investigation of the problem would require resources they simply do not have, or are reluctant to deploy, and decided to accept a superficially face-saving peace offer rather than fight it out.

  • So they settled the case in a way that reads in headlines like it's a bite out of the banks, but in fact is barely even that.


  • Really this looks like America's public prosecutors just wilted before the prospect of a long, drawn-out conflict with an army of highly-paid, determined white-shoe banker lawyers. The message this sends is that if you commit crimes on a large enough scale, and have enough high-priced legal talent sitting at the negotiating table after you get caught, the government will ultimately back down, conceding the inferiority of its resources.

For more, see Why the Foreclosure Deal May Not Be So Hot After All.

See also, Daily Finance: Why the Foreclosure Mess Settlement Proposal Can't Fix the Damage.

(1) In his earlier column, Taibbi emphasizes that he is not minimizing the significance of the robosigning scandal with the following observation:

  • Robosigning is not a small offense. It's not a "clerical" issue. It's a mass-perjury issue, a tax evasion issue, a contractual fraud issue, and it's a criminal conspiracy issue (the banks' highest executives were engaged in planning it) and it resulted in millions of errors that resulted in untold numbers of premature foreclosures.

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