Occupied Winter of Our Discontent (continued)

I have to admit that when President Obama tapped New York Attorney General Eric Schneiderman to lead a brand spanking new investigation into banksterism, my first cynical thought was "co-optation." Schneiderman would be just the latest in a long line of Democratic malcontents and holdouts to be taken on a figurative ride on Air Force One, emerging chastened, rewarded and mouthing "don't let the perfect be the enemy of the good" platitudes.

But there is reason to hope today that the pending sweetheart deal between the banks and the Obama administration may not be as sweet as the Big Five Banks had been hoping for. Schneiderman last night announced a relatively limited proposal: in exchange for a $25bn payout to victims of the robo-signing foreclosure fraud, there will be no criminal prosecution from the states which agree to the deal.  But the blanket perpetual immunity from punishment for the entire panorama of financial felonies apparently is not to be. The state agreement would not preclude the feds (read: Schneiderman and his posse of IRS and FBI agents) going after mortgage fraudsters.

Some of those skeptical that Barack Obama would ever go after the banking hand that feeds him were expressing mild shock today that there might be a Grand Perp Walk of Bank CEOs after all.  Remember, the president has stated time and again that he had no interest in punishing the banks. But then something called Occupy Wall Street came along, and made him an offer he couldn't refuse: investigate and prosecute, or we will hound you wherever you go.  Plutocracy or not, the United States still requires that presidents be voted into office. And savvy politician that he is, Obama knows which way the wind is blowing.

Sam Stein of The Huffington Post reports that banks will still be vulnerable in the following categories:

1. Criminal liability.
2. Tax liability
3. Fair lending, fair housing, or any other civil rights claim.
4. Federal Housing Finance Agency or the GSEs [Fannie Mae and Freddie Mac]
5. CFPB claims for the period after they came into existence in July 2011
6. SEC claims
7. National Credit Union Association Claims
8. FDIC claims
9. Federal Reserve Board claims
10. MERS claims

Early reports from the banking sector in the wake of Friday night's announcement and the revelation that Schneiderman's task force has already issued subpoenas show them to be borderline-panicked and indignant. Rupert Murdoch's New York Post ran a McCarthyesque red scare editorial screaming that Schneiderman was "shaking down the banks" and how dare he leave the door open to future criminal prosecution after the banksters pay up in good faith? It's the same old canard used by Timmy Geithner and Co.: if you upset the too-big-to-fail banks, the whole world will collapse. From the right-wing Post:

Besides, the prospect of future court action, should Schneiderman prevail, sure won’t help the economy.
On the other hand, demonizing financial institutions in populist fashion might help rile up the left — which, no doubt, is what Obama and Schneiderman care about most.
New York’s union cat’s-paw, the left-wing Working Families Party, is already tickled pinko — er, pink — with Schneiderman’s appointment, calling it “a big victory for the 99 percent.”
For America and New York, a world financial center, it sounds more like disaster.

Matt Taibbi of Rolling Stone is cautiously optimistic that Obama's back may finally be up against the wall on Wall Street. He says the robosigning scandal is really small potatoes compared to what really went on and what remains unpunished:

The securitization offenses were massive criminal conspiracies, identically undertaken by all of the big banks, to defraud investors in mortgage-backed securities. If you’re looking for an appropriate target for a massive federal investigation, one that would get right to the heart of the corruption of the crisis era... well, they picked the right target here. If they were to do a real clean sweep on securitization, the federal prisons would end up literally teeming with senior executives from the biggest banks. A lot of very big names would end up playing ping-pong and cards in Otisville and Englewood.

It may end up being a case of Neopopulist Obama being forced to act upon his own words as much as it pains him to do so. Taibbi adds: "One thing we do know: Obama’s decision to tap Schneiderman publicly, and dump Geithner, and whisper about a millionaire’s tax, signals a shift in its public attitude toward the Wall Street corruption issue. The administration is clearly listening to the Occupy movement. Whether it’s now acting on their complaints, or just trying to look like it’s doing something, is another question. It’s way too early to tell. But it’s certainly very interesting".

And as for Schneiderman's being co-opted, Dave Dayen of Firedoglake writes that the AG has promised to publicly disavow the task force and publicly walk away if he is in any way impeded. I think the only thing we can do for now is give him some time to put his money where his mouth is. But not too much time.

Gretchen Morgenson of the New York Times has written an excellent piece on Obama's task force for her "Fair Game" series about the nefarious banking system. The upshot: if they don't do something big very soon, what little credibility they have left will be shot.

Another glass-half-full observation: for the first time in its elite 0001% history, the World Economic Forum at Davos has heard the "inequality" word uttered. Occupiers are camped out in igloos. Severe income disparity may not be so healthy for capitalism. Greed may not be so good after all, even for the greedheads. The parasite eventually bleeds the host dry. The cancer dies right along with the victim.