CA may join NY and DE in probe of Wall Street role in mortgage meltdown
Forgetting, for the time being, the political theater of one Southern California Republican local politician’s call to create the 51st state, named South California (there have been at least 27 efforts for secession within parts of California since the 1800s 
) a news item with more legitimacy today involves the possible entry of California into the investigation of Wall Street’s role in the mortgage meltdown. New York and Delaware already have such investigations in progress, and the investigations MAY lead to criminal charges against financial executives.
In other words, corporate criminals could become REAL inmates. How poetic (and rare)!
California’s Attorney General, Kamala Harris, met with New York’s Attorney General, Eric Schneiderman today in San Francisco to discuss cooperation on the broad probe of how banks encouraged the financial crisis by creating risky financial instruments that were backed by mortgages. New York and Delaware already have more than a dozen lawyers who work full time on the investigation and have requested information from 13 financial firms that include Goldman Sachs and JPMorgan Chase & Co., according to people familiar with the investigation.
“We’re taking a hard look because the American people are entitled to a full investigation that uncovers all the facts and holds those responsible to account.”
California was the location of huge numbers of the mortgages and foreclosures that fed the financial crisis. According to an estimate by Moody’s Economy.com, since home prices peaked in 2007, California homeowners have lost $1.9 trillion (that’s with a “t”) in home equity!
Although the U.S. public has asked that financial executives who encouraged the real estate bubble to be held accountable, most investigations to date have focused on mortgage fraud by low-level bankers and appraisers or on foreclosures by banks and lenders.
Just like the old joke about “What’s the difference between responsibility and blame?” that Americans learned during Watergate: “The people who were BLAMED went to jail, but the people who were RESPONSIBLE did not!”
“Schneiderman’s office has requested documents from seven investment banks that sold mortgage-backed bonds to investors; two banks that held the mortgages while they were turned into bonds; four companies that insured the bonds; and two law firms that helped negotiate the process, according to people close to the investigation.
Delaware has separately subpoenaed MERS, the company that was responsible for registering the mortgages before they were turned into bonds, the people said.”
Schneiderman’s office is particularly feared by bankers because under New York law, unlike under federal law, prosecutors can build a case without proving that fraud was intentional. Nevertheless, obtaining a conviction may be difficult because convictions may hinge on intent anyway, which is hard to prove with evidence like a “smoking-gun” email or document. (Given the shoddy state of electronic privacy, how hard can such evidence be to obtain?)
As for California, Attorney General Kamala Harris’s decision may depend upon whether settlements by banks preclude the possibility of further prosecution and immunity from the type of investigations currently being conducted by New York and Delaware. Harris announced, in May, the creation of a 25-person task force to look at mortgage fraud, but the effort is threatened by state budget cuts.
-Bill at
Cheshire Cat Photo™ – “Your Guide to California’s Wonderland™”
You can view higher-resolution photos at the Cheshire Cat Photo™ Pro Gallery on Shutterfly™, where you can also order prints and gifts decorated with the photos of your choice from the gallery. The Cheshire Cat Photo Store on Zazzle® contains a wide variety of apparel and gifts decorated with our images of California. All locations are accessible from here. Be a “Facebook Fan” of Cheshire Cat Photo here! If you don’t see what you want or would be on our email list for updates, send us an email at info@cheshirecatphoto.com.
