Three recent developments suggest that the worm is turning and that the criminal behavior of the nation's huge money-center banks might finally suffer something approaching real justice.
Exhibit one: two weeks ago, Federal Judge Jed Rakoff of the United States District Court in Manhattan kicked the backside of the Securities and Exchange Commission for allowing the financial giant Citigroup to pay a $285 million settlement without admitting that it had either broken the law or even done anything reprehensible.
In fairness to the SEC, it accepts these bogus "pleas" because it does not have adequate resources to fight the Wall Street behemoths through the courts. If big government is the problem Republicans claim it is, why doesn't Washington have the money to prosecute big bankers who are clearly guilty of monumental fraud? Because Washington is Wall Street's lackey, that's why. Rakoff clearly did not get the memo.
Exhibit two: at approximately the same time that Rakoff rejected the SEC/Citigroup settlement as a moral insult, Massachusetts Attorney General Martha Coakley won a round that will benefit more than 700 local subprime borrowers. Coakley squeezed $52 million from the Royal Bank of Scotland for its role in the subprime mortgage meltdown. Coakley's office had previously nailed two other giants, Goldman Sachs and Morgan Stanley, for their roles in similar scams.
Exhibit three: shortly after her victory over the Bank of Scotland, Coakley returned to the ring. This time, she earned national headlines by walking away from a coordinated but unfruitful attempt by a group of state attorneys general seeking justice for victims of alleged foreclosure fraud by five of the nation's mortgage biggies: Bank of America, JP Morgan, Citigroup, Wells Fargo, and GMAC.
This was a welcome and gutsy move. Simply put, Coakley tired of the mortgage monsters trying to weasel out of their responsibility for evicting already ruined owners from their houses.
The banks routinely cut corners and engaged in shady practices when there were quick billions to be made during the housing bubble. In plain English, Coakley's suit contends that, once the bubble burst, banks — in a sleazy campaign to limit their own losses — once again played fast and loose with procedure and the law, sometimes foreclosing on property they no longer even owned.
If ever there was a criminal conspiracy to defraud Americans, the housing bubble was it. Why the federal government is not pursuing criminal charges against the pinstriped perpetrators is a mystery.
In Coakley, Massachusetts enjoys the services of one of the nation's most thoughtful and committed attorneys general. Her two-fisted approach in pursuing the malefactors of mortgage fraud — not only for wrongs committed as the bubble swelled, but also for rip-offs perpetuated after the bubble burst — should become the gold standard for similar prosecutions.