A Scandal Within a Scandal

New York Attorney General Eric Schneiderman has been unceremoniously kicked off the panel of state AGs negotiating a sweetheart deal with the big bank scammers over the robo-signing foreclosure fraud mess, because he wouldn't go along to get along.  He was being too mean to Wall Street, and throwing a monkey wrench in the works, as New York Fed member Kathryn Wylde so bluntly put it Monday.  He is insisting on treating the bankers as suspected criminals rather than the fine upstanding community parasites they are. (see my previous post).

The man doing the kicking was Iowa Attorney General Tom Miller, head of the 50-state panel investigating working with the banks on a simple settlement to make it all go away, quickly. Since the whitewash probe started last year, Miller's campaign war chest has received $261,445 in donations from the financial services industry -- 88 times the total of all contributions he had received in the past decade, according to findings of the National Institute on Money in State Politics.(NIMSP) 

Miller, a Democrat, was in the midst of a tough re-election battle as he took over the investigation -- and the out-of-state money began pouring in.  From the Des Moines Register:

Miller said the (NIMSP) report “is false or misleading from the start to the finish,” noting that almost all of the specific contributors listed in the report are not involved in the foreclosure irregularity issue.
Furthermore the report compares Miller’s campaign finances with other recent elections, including in 2006 when he ran unopposed. The comparison is unfair, he said.
“It’s riddled with misrepresentations and falsehoods,” Miller said. “But the main falsehood is that these people had vested interest in the investigation. None did except for two that give $15,000 and have been longtime friends of mine.”

So  -- only two of his pals compromised the investigation, thus ameliorating the whole conflict-of-interest miasma of corruption, huh?  This admission seemingly takes Miller's involvement well beyond the mere "appearance of impropriety."  The Dubuque Telegraph Herald certainly smelled a rat. From a May 1 editorial: 

Maybe Iowa Attorney General Tom Miller has done nothing wrong in accepting campaign donations from finance, insurance and real estate companies. But the appearance, at face value, of a conflict of interest is so strong, Miller has more explaining to do. Last fall, it was Miller who led the charge against Big Banks' improper foreclosure practices, but lately, he seems much more low-key about the pursuit of lenders who forced families out of their homes. A report published last week by the National Institute on Money in State Politics suggests one reason Miller has eased off the accelerator has to do with a war chest full of big donations.

This begs the question: who investigates a state attorney general, the chief law enforcement officer of the state, for possible corruption?  Eric Holder?  Don't hold your breath: if he's going after anyone, it's Schneiderman.  Besides, Tom Miller and Obama go way back.  He was instrumental in ensuring Barack's victory in the Iowa when he was still a relative unknown, saying in February 2007: "Endorsing a candidate this early is no ordinary occurrence in the Iowa caucuses - but Barack Obama is no ordinary candidate."  (little did we know then just how out of the ordinary).


Iowa AG Tom "Unconflicted" Miller

 Meanwhile, calls for the resignation of Kathryn Wylde for her own brand of conflict of interest have started popping up. There was that one demand from an activist group last March, (previous post), and now macroeconomic analyst Barry Ritholtz of The Big Picture is ramping it up, noting Wylde is supposed to be representing the public  from her seat on the New York Fed.  But, he writes, the fact that Wylde seems to think her job is defending Wall Street over the real victims of the mortgage debacle is not all that surprising and is merely paralleling the pro-bank stance of the Obama Administration:

I do not know if Ms. Wylde understands what her proper role should be, but clearly she is somewhat confused. She appears to be far more interested in representing the banks than the public.
Note that the Federal Reserve (and indirectly, the NY Fed) are conflicted players in this. On the one hand, they are supposed to be bank regulators (a task they have performed poorly). But they are also substantial investors in the banks, and their  regulatory oversight role is obviously conflicted.
There have been all manner of criminal and civil trespasses committed, and we should find out who ordered them, who committed them and why. AG Schneiderman should continue investigating the robo-signing, bring civil and criminal charges where necessary.
Recall that the original problems came about in large part due to Alan Greenspan’s Nonfeasance — the failure to perform his professional obligations of oversight and regulation. That any member of the Federal Reserve or NY Fed wants this closed before any investigation has been undertaken is a scandal of the highest magnitude.
Kathryn S. Wylde, and any other Fed member shirking their duties and committing nonfeasance should step down immediately.

Wylde is a very busy woman, with many fingers on the pulse (or in the pie) of New York. From her bio:

An internationally known expert in housing, economic development and urban policy, Wylde serves on a number of boards and advisory groups, including the Federal Reserve Bank of New York, the New York State Commission to Modernize the Regulation of Financial Services, the Mayor’s Sustainability Advisory Board, NYC Economic Development Corporation, The Legal Aid Society, NYC Leadership Academy, the Research Alliance for NYC Public Schools, the Manhattan Institute, the Biomedical Research Alliance of New York, and the Special Commission on the Future of NYS Courts.

Along with the Iowa attorney general, Wylde just does not see any conflict of interest. As she so blithely put it in an email to the Huffington Post in defending her defense of Wall Street, the banks she does not regulate "leave their institutional identities at the door and work with us on challenges facing the city and state."  (translation: buying off Gov. Andrew Cuomo via her "Committee to Save New York" lobbying cabal, getting him to dump the millionaires' surtax, leading to a budget deficit, leading to the announced layoffs today of over 700 teachers in New York City alone).

Appearance of impropriety or not, these Wall Street hacks and defenders of justice simply don't seem to care what we think.  Let them keep shooting their mouths off.  They're drowning in their own B.S.