This week's Quote of the Week is a bit late, but it's a real doozy. If you haven't been paying attention to the banking sector lately, you may be unaware that Bank of America has become quite the center of attention. With its stock down nearly 50% since January, the bank has found itself beset with questions regarding its solvency, similar to Lehman Brothers and Bear Stearns back in 2008.
But unlike with Bear and Lehman, the stakes are much higher now for Bank of America, and many more political players have much more to lose if it fails (think "too big to fail" is a thing of the past? Think again--the biggest banks have only gotten bigger). As a result, battlegrounds are shaping up everywhere, with almost everyone in the political and financial world (from Barack Obama to Warren Buffett) aligned to help save this floundering institution. Everyone, that is, except New York Attorney General Eric Schneiderman.
As Matt Taibbi notes in his blog post, the Obama administration is pushing the 50 state AGs to agree to a settlement with Bank of America over massive and widespread mortgage abuses, including foreclosure fraud. The settlement would largely indemnify BofA against future lawsuits from homeowners who were victimized, and essentially wrap up what Taibbi refers to as "the broadest and most destructive fraud scheme in American history, one that makes the S&L crisis look like a cheap liquor store holdup".
Unfortunately for Obama and BofA, Eric Schneiderman doesn't think this settlement quite covers it, and he's refusing to lie down. His refusal apparently led to his being kicked off of the leadership committee that is negotiating the settlement, and he's been villainized by bank-friendly politicians everywhere.
Politicians like New York Federal Reserve Bank board member Kathryn Wylde, who is the speaker of this week's head-smacking Quote of the Week. Speaking to Eric Schneiderman, she said:
This week's QUOTE OF THE WEEK
"It is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street — love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible."
- New York Fed board member Kathryn Wylde
Wylde, like Schneiderman, ostensibly represents "the public" in her role with the New York Fed. But with this quote, she has made it clear that she has no intention of actually representing the best interests of the public. She seems to think that it is the job of public servants to make sure that legal issues are resolved expediently, with fairness and justice running a distant second.
I'd of course love to ask Ms. Wylde what she considers "indefensible", if the list of abuses enumerated in this article don't qualify (yes, that last link is about Chase and not Bank of America, but the very same things have been occurring on BofA's watch, if not worse... I suggest you read that article regardless). Schneiderman naturally concurs with my (and Taibbi's) opinion, and it's a good thing. He seems to be the only one around here who's actually looking out for the public and performing his civic duty.
For what it's worth, Schneiderman's view seems to have gained some traction since Taibbi's blog post was published. On Monday, the FDIC filed its objection to the proposed settlement, and this was followed up yesterday by a similar lawsuit filed by a group of homeowners supported by the National Consumer Law Center. No matter what the Obama administration would seemingly like to see happen here, a President cannot completely override our justice process, not even when big-bank apologists like Kathryn Wylde are trying their best to do so.
Contrary to what Ms. Wylde might like us to believe, this isn't an issue of "love" versus "hate"--it's an issue of right versus wrong, legal versus illegal, and true capitalism versus what is increasingly looking like a semi-socialist corporatocracy. Eric Schneiderman is one of the only friends that the general public has left, whether or not we all realize it. Do yourself a favor and write Schneiderman a note of encouragement--while you're at it, you could also demand Kathryn Wylde's resignation.