Empire and the banks. President Obama’s State of the Union address, bracketed by imperial bombast, made actual news with yet another administration maneuver to protect Wall Street from the wrath of the states. The remainder of his speech was mainly a rehash of previous policies, heavy on tax tinkerings that would have made a previous generation of moderate Republicans – a now extinct breed – proud.
The only newsworthy item, the creation of a “special unit of prosecutors” that the president announced would “expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis,” is not an Obama initiative, but a response to unwanted pressures. Up until almost the moment of the presidential address, the administration has been bullying state attorneys general to drop their independent investigations into banker criminality in the 2008 meltdown and the foreclosure of millions of Americans’ homes. The so-called “robo-signing” scandal calls into question the fundamental legality of Wall Street mortgage securities practices – what some have described as the “crime of the century.” The small group of attorneys general – variously numbered between 5 and 15 – have been buttressed by a vocal Campaign for a Fair Settlement, made up of consumer and labor groups and activist organizations such as MoveOn.
Obama’s operatives have doggedly pressed for a settlement that would effectively give banks immunity from prosecution. Instead, home owners would be “compensated” from a paltry fund of no more than $25 billion – a drop in the bucket, considering the trillions in housing values that disappeared into illegally securitized air in the catastrophe, and much of the money might not even come out of the bankers’ own accounts. Obama had hoped to roll over the recalcitrant attorneys general in time to make the settlement the centerpiece of his State of the Union.
