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Consequential Monday Foreclosure Fraud Meeting Less than Consequential

One thing missing from all the stories about this alleged key foreclosure fraud meeting in Chicago on Monday were confirmations from the state AGs, particularly the ones who have been resistant to a settlement, that they would attend. So I did some calling around. And I could not find one state Attorney General committed to attending this meeting. Not only that, some weren’t even sure they would send staff. This has the feel of a snow job, with HUD Secretary Shaun Donovan and Iowa AG Tom Miller and his counterparts trying to sell a narrative in public about an imminent solution, around the time of the State of the Union address, when the reality is much different.

The office of Eric Schneiderman would not commit to attending the Monday meeting, for example, though they didn’t rule it out either. They simply didn’t really have a plan for moving forward yet. And other AG offices were similarly skeptical. “I don’t think we’re going,” said one office. “Why spend the money on staff to fly out there when the terms of the deal are at best speculative?” Others believed that mostly staff would be involved in the meeting, not the AGs themselves. The sources were able to speak more freely off the record.

That’s a far cry from how this was hyped in the media. It was carefully circumscribed, with the idea that the AGs “are being invited” to meet with Donovan and a Justice Department official. No attendance was ever confirmed, and now we know why.

The meeting would have the potential participation of members of the executive committee doing the negotiating with the banks, including Tom Miller and probably Illinois AG Lisa Madigan. But the important actors here are the holdouts, the Justice Democrats, the ones who put together last week’s meeting with up to 15 colleagues to discuss possible ways to work together on investigations and prosecutions without a settlement. And I could not confirm the attendance of any of them at Monday’s Chicago event. There is talk about a more important meeting in mid-February, but that hasn’t been confirmed.

The hype appears to be a way for the forces who want a deal with the banks to claim some momentum toward a deal, without any momentum actually existing. This is no way should shut down the efforts of the activist community pressuring state AGs and the White House to block a deal. It’s good to see MoveOn get 225,000 signatures on a demand to investigate the banks, for example. In between singing Al Green last night, the President may have heard the faint sounds of those had to contend with two borrowers who want to hold the banks accountable. And that’s a good thing. Engagement is important. The banks and their political allies aren’t going to stop trying to get a sweetheart deal, so the activists shouldn’t either.

But I bring this up to point out that you should not jump on every rumor, even if they seem credible. We have heard Administration officials and the Iowa Attorney General’s office perpetually cry wolf about this settlement, and they’ve missed every deadline they’ve laid down. The claims of an imminent deal act as a disinformation campaign, to create some pressure for the dissident AGs that doesn’t actually exist. It’s the same kind of pressure exerted when they create two term sheets, one with California included and one without, to display how much California will “miss out” if they turn away from the deal. These are dirty tactics and they should be labeled as such.

Fortunately, I don’t think the AGs are buying it. The financial claims in the settlement are seen as inadequate and in some cases just funny money. The AGs who went through the Countrywide settlement know that the banks won’t hold up their end of the bargain, as former Ohio AG Mark Dann says pretty clearly.

The one thing these AGs should know is that they have a lot of support at the grassroots level for a real investigation that exposes the depths of foreclosure fraud and holds accountable those who perpetrated it.

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David Dayen

David Dayen