“Crime Does Pay”: U.S. Appeals Court Throws Out Fraud Charges Against Bank of America
Yesterday the 2nd U.S. Circuit Court of Appeals in New York demonstrated why prosecuting banks for committing fraud in the lead-up to the Great Recession is such a difficult proposition. Here’s the background on one of the biggest government enforcement cases to go to trial in connection with the U.S. housing meltdown and financial crisis.:
A federal jury had in 2013 found Bank of America and Rebecca Mairone, a former midlevel Countrywide executive, liable for fraudulently selling shoddy loans originated through its “High Speed Swim Lane” program, also called HSSL or “Hustle.”…
Following the verdict, U.S. District Judge Jed Rakoff in 2014 imposed a $1.27 billion penalty on Bank of America and ordered Mairone to pay $1 million.
That decision was appealed and a ruling issued yesterday.
The 2nd U.S. Circuit Court of Appeals in New York found insufficient proof under federal fraud statutes to establish Bank of America’s liability over a mortgage program called “Hustle” run by the former Countrywide Financial Corp…
In a 3-0 decision, U.S. Circuit Judge Richard Wesley said the evidence at most showed that Countrywide breached contracts to sell investment-quality loans, and that there was no proof it intended any deception.
“The trial evidence fails to demonstrate the contemporaneous fraudulent intent necessary to prove a scheme to defraud through contractual promises,” Wesley wrote.
This has always been the challenge. In order to prosecute banks and/or individuals, the most likely charge is that they committed fraud. But federal statutes require proof of intent in order to find a business or person guilty of fraud. In other words, the prosecution not only has to prove that the defendant committed fraud – but that they intended to do so. The dismissal of this case demonstrates what a high hurdle that can be.
We often hear about the “meager” financial settlements the Justice Department negotiated in similar cases. It’s worth noting that in this instance, Bank of America and Rebecca Mairone got away with having to pay nothing.
By: Nancy LeTourneau, Political Animal Blog, The Washington Monthly, May 24, 2016
“Unprecedented Demographic Change”: Adapting To Change Requires Curiosity And Creativity
Our 24/7 news cycle that is addicted to the crisis of the moment and the horse race of electoral politics doesn’t do a good job of recognizing the tectonic shifts of change that are undergirding our lives.
The attacks of 9/11 followed by the Great Recession changed the way a lot of people feel about America in ways that aren’t articulated often enough. We are experiencing demographic change that is unprecedented, are nearing the end of two terms for our first African American president and are likely on the cusp of electing our first female president. All of that is happening as we are experiencing the effects of globalization and automation in our economy while technology becomes more central to how we live our everyday lives. Finally, we are just beginning to see the effects of climate change – with dramatic impacts looming on the horizon.
We can play the political parlor game of trying to suss out which of these is the most responsible for the dynamics of our current politics, or we can notice that the combination of those changes is affecting all of us. When Kevin Drum wonders why both political parties are afraid to talk about an improving economy and Gregg Easterbrook asks when optimism became uncool, I suspect that it is the weight of all of these changes that is the answer. But Easterbrook makes an interesting observation.
Though candidates on the right are full of fire and brimstone this year, the trend away from optimism is most pronounced among liberals. A century ago Progressives were the optimists, believing society could be improved, while conservatism saw the end-times approaching. Today progressive thought embraces Judgment Day, too…
Pessimists think in terms of rear-guard actions to turn back the clock. Optimists understand that where the nation has faults, it’s time to roll up our sleeves and get to work.
The Tea Party responded to these changes by saying that they wanted to “take our country back.” When Donald Trump talks about “making America great again,” that’s essentially what he is saying too. Fear and retreat are a pretty common reaction to change among human beings.
Traditionally progressives have faced challenges like this by working on ways to move forward rather than pinning for days past. To do so requires things like curiosity and creativity. The past can be examined objectively, but the future is still uncertain. Ideologues too often stand in the way of curiosity and creativity. Here is how then-Senator Barack Obama talked about that back in 2005:
…the degree that we brook no dissent within the Democratic Party, and demand fealty to the one, “true” progressive vision for the country, we risk the very thoughtfulness and openness to new ideas that are required to move this country forward. When we lash out at those who share our fundamental values because they have not met the criteria of every single item on our progressive “checklist,” then we are essentially preventing them from thinking in new ways about problems.
I believe that this is why the President so often says that it is young people who inspire his optimism. They tend to be free of the ideologies and baggage of the past. Instead, they bring fresh eyes to the challenges we face going forward. Progressives need not fear the changes we are experiencing today when we tap into all of that.
By: Nancy LeTourneau, Political Animal Blog, The Washington Monthly, May 17, 2016
“The Exploitation Of White Resentment”: Donald Trump’s Ready-Made Constituency
There are competing narratives being discussed right now about what is driving the white male support for Donald Trump. Last weekend, David Atkins did a great job of articulating one of them.
In short, voters really are angry about the economy. They want greater security. They don’t want more jobs so much as they want answers for how their jobs are ever going to pay for the lifestyle and security they deserve. And they want justice and accountability against the people they believe have cheated them.
Another narrative about what is animating white male Trump supporters was recently described by Jamelle Bouie.
…we’ve been missing the most important catalyst in Trump’s rise. What caused this fire to burn out of control? The answer, I think, is Barack Obama.
Bouie goes on to suggest that, unlike the theories about this on the right, Obama has not implemented a radical political agenda. But there is something else at play.
We can’t say the same for Obama as a political symbol, however. In a nation shaped and defined by a rigid racial hierarchy, his election was very much a radical event, in which a man from one of the nation’s lowest castes ascended to the summit of its political landscape. And he did so with heavy support from minorities: Asian Americans and Latinos were an important part of Obama’s coalition, and black Americans turned out at their highest numbers ever in 2008…
For millions of white Americans who weren’t attuned to growing diversity and cosmopolitanism, however, Obama was a shock, a figure who appeared out of nowhere to dominate the country’s political life. And with talk of an “emerging Democratic majority,” he presaged a time when their votes—which had elected George W. Bush, George H.W. Bush, and Ronald Reagan—would no longer matter. More than simply “change,” Obama’s election felt like an inversion. When coupled with the broad decline in incomes and living standards caused by the Great Recession, it seemed to signal the end of a hierarchy that had always placed white Americans at the top, delivering status even when it couldn’t give material benefits.
In terms of the shock Barack Obama represented, I was reminded of something Jonathan Chait wrote after watching the movie 12 Years a Slave.
Notably, the most horrific torture depicted in 12 Years a Slave is set in motion when the protagonist, Solomon Northup, offers up to his master engineering knowledge he acquired as a free man, thereby showing up his enraged white overseer. It was precisely Northup’s calm, dignified competence in the scene that so enraged his oppressor. The social system embedded within slavery as depicted in the film is one that survived long past the Emancipation Proclamation – the one that resulted in the murder of Emmett Till a century after Northup published his autobiography. It’s a system in which the most unforgivable crime was for an African-American to presume himself an equal to — or, heaven forbid, better than — a white person.
Perhaps the specter of “calm, dignified competence” reminds you of someone. I have often said that freeing Black people from slavery and giving them civil rights were the first two challenges to the racism that was embedded in this country’s founding. But going from Black people as equals to Black people as leaders is the one Obama put on the table. Even a lot of people who don’t consider themselves to be racist have struggled with that one.
But we really don’t need to see the arguments made by Atkins and Bouie as opposing one another. That is because this country has a very long history of using racial resentment to exploit the economic anxieties of white working poor people. That is the basis on which the modern Republican Party was formed with the advent of the Southern Strategy. But it goes back much further than that. Tim Wise points out that it was the very reason for the development of the concept of “whiteness” in the late 1600’s to use racism as a way to divide and conquer.
Over this country’s history African Americans have gained their freedom from slavery, fought for equal rights, and even risen to positions of leadership. The one thing they can’t do is change the hearts and minds of white people who insist on blaming them for their insecurities. That is on us. Until that happens, the Donald Trumps of the world will have a ready-made constituency to exploit.
By: Nancy LeTourneau, Political Animal Blog, The Washington Monthly, May 12, 2016
“Ahistorical”: Trump And Clinton Are Telling Two Radically Different Stories About The Economy. Only One Is Based In Reality
In this weekend’s New York Times Magazine, there’s an interview with President Obama in which he assesses his economic legacy, and as you might expect, he has a complicated view of things. He thinks his administration did an excellent job pulling us out of the Great Recession: “I actually compare our economic performance to how, historically, countries that have wrenching financial crises perform. By that measure, we probably managed this better than any large economy on Earth in modern history.” But he wishes he had been able to pass more infrastructure spending: “it was the perfect time to do it; low interest rates, construction industry is still on its heels, massive need.”
Obama also makes an argument about what Republicans propose to do on the economy that gets directly to the competing stories that the two parties are going to be presenting to the American public this fall.
Even if a contest between Donald Trump and Hillary Clinton may be more focused on personality than your typical presidential campaign, it’s still the case that the outcome of the election will be determined in significant part by which of these economic stories the voting public finds more persuasive. And each story has two parts: a description of the American economy as it is now, and a proposal for what the candidate would like to do and how that plan will change things. Here’s Obama’s assessment of the Republicans’ second part:
“If you look at the platforms, the economic platforms of the current Republican candidates for president, they don’t simply defy logic and any known economic theories, they are fantasy,” Obama said. “Slashing taxes particularly for those at the very top, dismantling regulatory regimes that protect our air and our environment and then projecting that this is going to lead to 5 percent or 7 percent growth, and claiming that they’ll do all this while balancing the budget. Nobody would even, with the most rudimentary knowledge of economics, think that any of those things are plausible.”
You won’t be surprised to hear that I happen to agree with him on this, though I’d describe how ridiculous it is in somewhat stronger terms. I can’t stress this enough: Republicans argue that if we just cut taxes on the wealthy and reduce regulations on corporations, then the economy will explode in a supernova of prosperity for all. You can call this belief ahistorical, or unsupported by facts, or baseless or implausible, but if you want to be frank you’d have to say that it’s absolutely lunatic.
But let’s put this in context of the stories the two candidates will be telling. Here’s Donald Trump’s economic story:
The economy is an absolute nightmare. Americans are living in such misery that they’re practically eating their own shoes in order to survive. If we cut taxes on the wealthy, reduce regulations on corporations, renegotiate trade agreements, and deport all illegal immigrants, then our economy will be spectacular and working people will experience American greatness again.
And here’s Hillary Clinton’s economic story:
The economy is doing pretty well, and a lot better than it was eight years ago when the Republicans were in charge, but it could be even better. If we pass some worker-focused measures like increasing the minimum wage, stronger overtime protections and guaranteeing equal pay, and make infrastructure investments, then our economy will improve for everyone.
Trump’s story is the same one other Republicans tell, with the addition of the idea that “bad deals” on trade have had a crippling effect on the country. For the moment we’ll put aside the merits of Trump’s claim that imposing enormous tariffs on Chinese goods will cause all those jobs sewing clothing and assembling electronics to come pouring into the United States, but the political question around Trump’s story is whether people will believe his over-the-top description of both what’s happening now and the transformation he will be able to produce.
We’ve known for some time that voters’ perceptions of the economy are colored by partisanship: to simplify a bit, when there’s a Democrat in the White House, Republican voters will say that the economy is doing poorly and Democratic voters will say it’s doing great; when there’s a Republican president, the opposite is true.
For instance, in 2012 when Barack Obama was running for reelection, 49 percent of Democrats told the National Election Studies that the economy had gotten better in the previous year, while only 17 percent said it had gotten worse. On the other hand, nine percent of Republicans said it had gotten better, while 56 percent said it had gotten worse. Go back to 2004 when George W. Bush was running for reelection, and we see the reverse: 43 percent of Republicans said the economy had gotten better and 22 percent said it had gotten worse, while only 10 percent of Democrats said it had gotten better and 63 percent said it had gotten worse.
So obviously, people aren’t just reacting in an objective way to what they see around them. At the same time, there is a reality that can eventually poke its way through the veil partisans place over their eyes. In 2008, when the economy was in a catastrophic decline, everyone in both parties agreed on what was happening (94 percent of Democrats and 88 percent of Republicans said it had gotten worse).
Times like 2008 are rare, though. Today, the objective reality is a lot closer to the way Democrats describe it, in large part because they aren’t offering an extreme version of their truth. If Obama and Clinton were more rhetorically similar to Donald Trump, they’d be saying that this is the greatest economy in the history of human civilization, everybody has a terrific job, and there’s so much prosperity that the only question any American has is whether to spend their money on everything they could ever want or just roll around in it like Scrooge McDuck.
But they aren’t saying that. Instead, they’re attempting the tricky balancing act of emphasizing the progress Obama has made while acknowledging the long-term weaknesses in the economy. Both of those things are real. Since the bottom of the Great Recession early in Obama’s first term, the economy has added 14 million jobs, and unemployment is now at 5 percent. On the other hand, income growth has been concentrated at the top and Americans still feel uncertain about their economic futures.
Donald Trump has chosen to pretend that the good things about the American economy don’t exist, and weave a laughable fantasy about what his policies will produce (“I will be the greatest jobs president that God ever created”). Can he convince voters — particularly those in the middle who might be persuaded to vote for either candidate — to believe it? I guess we’ll see.
By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line Blog, The Washington Post, April 28, 2016
“The GOP Sounds Of Silence”: From ‘Where Are The Jobs?’ To ‘Where Are Republicans On Jobs?’
The economic news on Friday was even better than optimists expected: the United States added nearly 300,000 jobs in December, wrapping up the second best year for the American job market in over a decade. In fact, looking at the last two years combined, 2014 and 2015 were the best back-to-back years for job creation since 1998 and 1999, at the height of the dot-com boom.
While no mainstream American politicians publicly root against the U.S. economy, the fact remains that this strong job growth must be baffling to Republicans. GOP orthodoxy, repeated ad nauseam, is that President Obama’s domestic agenda – the Affordable Care Act, higher taxes on the wealthy, Wall Street regulations, environmental safeguards, et al – is crushing the economy and stifling the American job market.
The only way to put Americans back to work, Republicans insist, is to do the exact opposite of the policies that cut the unemployment rate from 10% to 5%.
Obviously, that’s a tough sell for anyone with even a passing familiarity with the facts, but it got me wondering: how exactly did Republican officials and candidates respond to Friday’s good news?
When I say they reacted to jobs report with silence, it’s important to stress that I’m being quite literal. For years, the Republicans’ economic line was, “Where are the jobs?” With over 14 million new private-sector jobs created in the last 70 months, the new, more salient question has become, “Where are the Republicans on jobs?”
Over the weekend, for example, I checked House Speaker Paul Ryan’s (R-Wis.) official blog, which used to publish a statement with the release of every new jobs report. Friday, however, featured plenty of new content, none of which referenced the job numbers.
The Republican National Committee’s official blog also used to issue once-a-month press releases on unemployment, but on Friday it said nothing. The same is true of RNC Chairman Reince Priebus’ Twitter feed.
There was similar silence from Senate Majority Leader Mitch McConnell (R-Ky.) and the Senate Republican leadership team.
How about the presidential candidates? Nothing from Donald Trump. Or Ted Cruz. Or Marco Rubio. Or Jeb Bush. Or Chris Christie.
Look, I don’t expect GOP presidential candidates to issue a statement celebrating President Obama’s successes in putting Americans back to work after the Great Recession. And I certainly don’t imagine Republicans are going to announce a plan to reevaluate all of their bogus assumptions about Obama’s agenda and the economy.
But we’ve reached the point at which Republicans no longer seem interested in talking about job creation at all. It’s as if they hope ignoring the issue altogether will keep people from noticing one of the most remarkable turnarounds in the job market in a generation – which might even work, since much of the political world barely stopped to notice Friday’s jobs report.
Republicans could say the good news will be even better if they’re elected. They could celebrate strong job growth and make the case that Obama deserves no credit. They could say something about the issue that, up until quite recently, dominated the political debate like no other.
But for now, it seems the GOP has decided the easiest course of action is to pretend the good news on jobs simply doesn’t exist. Up until fairly recently, such a scenario would have been hard to even imagine.
By: Steve Benen, The Maddow Blog, January 11, 2016
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