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Matt Taibbi writes: "This investigation has the potential to be a Mother of All Nightmares situation for the banks for a couple of reasons. For one thing, the decision to go after the securitization process is a total prosecutorial bullseye. This is the ugly heart of the wide-scale fraud scheme of the bubble era. Again, the business model during this time was a giant bait-and-switch scam."

File photo, Wall Street Bull, 06/15/09. (photo: file, unspecified)
File photo, Wall Street Bull, 06/15/09. (photo: file, unspecified)

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+57 # Kayjay 2011-05-18 17:27
Maybe AG Schneiderman's actions will prove to be the smelling salts this country's electorate will whiff and wake up to the shenanigans pulled by greedy banking industry. If pursued such a scandal could eclipse Watergate and Teapot Dome. Most high ranking politicos (whose names....we need to know) would like to see a clean resolution to this mess. Well...that's no surprise because we might find out who has reached into this sticky cookie jar. In the 1920s Pres. Harding's sec of Interior, Albert Fall was caught cozying up to oil executives who bribed him for leases at Teapot Dome. I'm sure some Beltway politicos fear a legitimate banking investigation will expose them. Too bad, cause we really need justice for all, in these parts. Carl e out of retirement!
+42 # usedtobesupermom 2011-05-18 22:10
I sure hope that Wall Street gets just what they deserve. When do we (Main Street)get to TAR & FEATHER them? They deserve that too!
+18 # Lin 2011-05-19 12:59
tar & feather, hell--I want the money they stole paid back to all the people who lost their total life savings, retirement and homes. They can work it off on chain gangs like other criminals if they can't sell all their boats, houses, cars and airplanes.
+27 # Don C. Price 2011-05-18 22:55
Look what happened to Elliot Spitzer, not that he didn't ask for it in a way. But they sure did target him. I'm worried. The stakes are even higher in this case, and if they can't ruin Schneiderman with legal shenanigans would they stop with that?
+11 # Observer 47 2011-05-19 09:21
Hell, no!! These guys are playing for all the marbles! Schneiderman's days would be numbered.
+9 # Lin 2011-05-19 13:04
How did Spitzer 'ask for it'? He knew what those Wall St thieves were doing and it was not nickel dime game. Spitzer was no worse than Newt Gingrich though you would never know it to hear the media touting the darling Newt who left one wife for another when she got cancer, and then left that 2d wife for his 3d wife when she got multiple sclerosis. Wife 3 better watch your health. BTW Newt had his next wife in the wings before divorcing his current wife. In other words, he was screwing around outside his marriage.
+15 # Liz Lynch 2011-05-18 23:13
Would somebody please explain how all this loan packaging/selli ng/re-packaging and/re-selling was done w/out "glitches"..? A monthly mortgage payment to the lender, as we know it, includes insurance premiums and property (real estate) tax ... local tax collectors might have been piling on late charges prior to placing a lien on the property ... but I don't believe for a minute that any Insurance Co would keep a home insurance policy "current" if payment was not made timely. Who got the Moolah???
+11 # Gizmo 2011-05-18 23:19
I think we can expect some Federal intervention on this issue. IMHO, there is no possibility that Obama and the corporate Congress will allow AG Schneiderman to take down the big bankers. This thing will get "fixed" behind closed doors. James Baker will likely be highly compensated for brokering the deal.
+29 # ER444 2011-05-19 01:52
Let's hope the baron banks have to come up clean !! But let's take this one step further. Let's make sure when they finally are called to justice that the massive fines are used to get the poor dooped people who have lost everything back in their homes. THAT would be justice. That would also get the money back in the pockets of those who REALLY are the engine of our economy, not the rich, not the banks, but the everyday Joe who needs a new washing machine or a car but can't afford it because the baron banks stole everything. That is the answer to getting our economy back on its feet, not helping the banks, not giving the rich more tax cuts. Get the money back to the people who really spend it and watch America grow !!
+5 # H.M. 2011-05-19 01:54
I wonder if it's too early to start speculating on who we want to play the roles for these guys when the whole thing is made into a movie! Suggestions welcome.
0 # AML 2011-05-22 16:44
Billy Bob Thornton, John Malcovich, Ned Beatty, you pick.
0 # theshift33 2011-05-23 00:11
Well Obama can play himself because by then he hopefully won't be President anymore. He is the posterchild of betrayal with his eloquent, slippery charm and I won't buy it for another round. He has sided with the feudal lords over and over, trampling on the constitution and ignoring the rule of law.
+21 # Ralph Averill 2011-05-19 02:58
I hope the investigation also looks into the rating agencies; S&P, Moody's, etc. that gave AAA ratings to what were really junk bonds.
-6 # rf 2011-05-19 04:46
OOHH! Its so scarey! I just want it all pretty again!

Regards, Obama

ps. I've been paid!
+10 # Observer 47 2011-05-19 09:23
Whether you're being sarcastic or sincere, rf, you're nevertheless correct.
+21 # Bruce Gruber 2011-05-19 05:24
Love to listen to Elizabeth Warren, Elliott Spitzer and Ellen Brown discuss this whole rotten barrel with Keith Olbermann on his upcoming June innauguration
+12 # Homer Peters 2011-05-19 10:08
BG, You hit the nail on the head. I was just now wondering/hopin g that Keith has the time to read all of this. What a grand slam opening it would be for his new show. BTW, why is our beloved wonder boy president so quiet on the Warren appointment? I'll bet he wishes all this would go quietly away. Hope and change my ass!
+35 # stonecutter 2011-05-19 06:00
If this doesn't happen, if it isn't pursued to the fullest extent the law permits in NY State, this country will never be right again. Not to put too dramatic a point on it, but it's as if a father serially raped his daughters, while the mother stood by passively and did nothing to stop him, out of crippling fear, mixed with self-protection and an irrational, evil jealousy. The whole thing kills the soul.

The soul of this country is at risk, and I'm saying that not as a religious person, not at all, but as a human being who believes in the existence of an ineffable soul in individuals, which joined together represent the soul of America as a nation of laws, justice and due process. If Nixon can be forced to resign the presidency by due process of law--despite the pardon he received that he did not deserve--Wall Street can be held accountable for the catastrophe it has visited on this country and the world.
+8 # billy bob 2011-05-19 07:36
NCMike? fortheteaparty?

I'm curious what the pro-Wall Street take on this would be.
+7 # Ken Hall 2011-05-19 12:49
They do seem strangely silent, don't they?
+8 # Dave W. 2011-05-19 16:17
billy bob, "NCMike?, fortheteaparty?
The "gentlemen" of which you speak may be re-assessing their respective political views in wake of recent, shall we say, embarrassing moments for the Gluttonous Oligarchic Plutocrats, better known as the GOP. Ryan IS introducing death panels. Gingrich is having great difficulty emerging from a speaking engagement without putting his defiled foot in his mouth. Beck is castigating McCain's daughter for being overweight, as if his body were Atlas like, Palin is hiding in an plush igloo somewhere, Bristol just had her chin re-arranged, and "The Ahnold" out here in Calee-fornia has demonstrated once again and with complete authority that "family values" begin in the home. Meanwhile, back in "empire America", the rich get richer, the poor get poorer, the "celebration" of an assassination is pooping out and the reality of "Fascist America" is possibly donning on our regularly appointed RSN stooges. Could it be possible? Nah! They'll be back. Just off licking their wounds somewhere.
+7 # NIZ 2011-05-19 07:48
Thanks Matt for incredible reporting.. what remains to be done with the fall out that is devastating our housing industry, constructions industry... people losing everything they had- homes, savings, livelihood, credit ratings etc. The devastation throughout the country is enormous. ALL PRINICPAL BALANCES MUST BE REDUCED TO THE FAIR MARKET VALUE NOW to stabilize the housing industry and thereby stopping the freefall of prices caused by foreclosures that these very same banks are fraudulently continuing to perform. The pace is increasing and the ultimate result on our society: homeless people, homeless children-people in a hole so big they can never recover. Seriously, making the banks reduce the principal balance on the homes either purchased or refinanced in the bubble is a great solution. none of the HAFA or loan mod crap is going to work until principal balances return to fair market value... MARK TO MARKET!!
Those principal balances were based on the bubble prices and they are gone... we need to face the facts of that. I think everyone under water should stop making payments now. they will never recover those $$ and every dollar one puts into the property might has well be burned in the fireplace... it was a bubble the likes of which this country has never seen ... all caused by the banksters.....
+4 # NIZ 2011-05-19 07:49
if millions of people stop making their mortgage payments all at once that will take millions (maybe billions) out of the hands of the banksters and it will make a statement!!
+20 # Christopher Marlowe 2011-05-19 08:06
People have pointed out that Spitzer would have done something like this, but he suddenly got taken down by a scandal. Obama has done NOTHING about anything for his entire term, and now we have the lone AG standing up against the corporate giants?
Matt Taibi has done a brilliant job of explaining this complicated mess to the people of this country, and I hope to hear more.
Another guy who has been very helpful in explaining these frauds is Max Keiser. As Keiser has repeatedly pointed out: in the S&L swindle, hundreds of people went to prison. This time we have Bernie Madoff, and I think that was just because TPTB thought zero was too few. Madoff is too old to even serve one third of his sentence.
The whole world has been swindled by these banks, and I'm concerned that most of them are going to walk away and hide behind secure walls protected by homeland security. Meanwhile, the masses will wait for the money to show up on our food stamp accounts, and then we will go to WalMart and get strip searched. O Brave New World...
+2 # Dave W. 2011-05-19 16:00
Obama has done nothing about anything for his entire term, and now we have lone AG standing up against the corporate giants." Doctor Faustus...would understand Obama's "predicament" rather well, don't you think?
+5 # Lulie 2011-05-19 08:14
My soul wants Wall Street taken to the woodshed, but my pocketbook wants to keep Wall Street fat and happy. Few people have "pensions" anymore -- we depend on investments to support ourselves during retirement. The system has been rigged so that we all have a huge stake in the success of Wall Street, so the prospect of "crippling" punishments scares me. Remember a few years ago when your 401(k) tanked? I hate to see these banksters get away with it, but as a retired person, I don't have time to wait for the system to right itself.
+1 # Paul 2011-05-19 10:18
How self serving and greedy can you get. I've got mine, screw everyone else!
+10 # Robert Griffin 2011-05-19 13:55
I don't think that's Lulie's view. Lulie depends on investments for support during retirement. However Lulie is incorrect about many of us; we haven't had the money to make investments which could give us a stake in the success of Wall Street.
+12 # JRS 2011-05-19 14:34
Hey Paul, how about a little compassion? Lulie's point is not to defend Wall Street out of her own alleged greed, but to point out how we all have become enmeshed with Wall Street's fortunes. There is some truth to this, like it or not, and Lulie obviously does not like it. So I don't think her sentiment is "screw everyone else," rather, she's pointing out a way in which all of us (or very many ordinary Americans with 401ks, at least) are screwed if Wall Street gets its just desserts. Disagree if you want. But to call this retired person "greedy" just because she does not want her retirement stash eviscerated is way off. I for one acknowledge Lulie for pointing out that calling the banksters to account may have further financial impacts on us (which we may or may not tolerate), and also pointing out how, relatedly, we are all subject to this perverse system.
+25 # Michael Rivero 2011-05-19 09:24
Matt has, as usual, hit the bulls-eye on this article. The reason for the economic crash is that Wall Street got caught trying to pull the biggest financial swindle in history, and together with the US Government, looted the American people to cover the losses. But, while I respect Matt for his courage and accuracy, he is incredibly naive if he thinks this government will do anything more than pretend to have an investigation followed by an official declaration that the failure is spread among too many parties, and that therefore prosecutions of individuals will serve no real purpose. We will the be encouraged to "share the burden" to make things right with the investors stupid enough to trust Wall Street, and in true fascist economic fashion, the profits will be kept private and the losses socialized across all of America.

Losses so far $27 trillion (Per Dylan Ratigan), which means the average (non-rich) American has lost 23% of their net worth due to this looting. And, of course, said looting will continue as long as the American people sit still for the shearers.
+8 # Peter Brazaitis 2011-05-19 10:47
I hope AG Schneiderman has the courage and determination to see this investigation through. To bring some justice to the millions of people who have already suffered and continue to suffer emotional anguish and physical hurt because of the callus greed and crime perpetrated on them by the banks. People have lost their homes, their hard earned savings, and worse, their hopes, dreams, and futures. Thank you Mr. Schneiderman for standing up for what is right and just. I only wish we had more of our leaders taking less money from Wall street and caring more about the people that they are really supposed to represent.
Peter Brazaitis
Harwinton, CT
+6 # George Grover 2011-05-19 11:39
This is a JOKE. This was not something that just happened because of LACK OF OVERSITE, or SIMPLE INCOMPOTENCE. Anyone that holds credit in AMERICA for any purpose is issued what some call THE MARK OF SATAN, known as A FICO SCORE, THAT IS CONTROLLED BY THE lenders. so can someone answer me why, for approximately 57 years the lenders used this program known as a FICO SCORE to seperate all loans sold on the MARKET through WALL STREET. And all of a sudden one day they wake up and decide to MIX ALL FICO'S TOGETHER, so every investor that purchased these financial instruments, did so with adulterated bundles? Were the investors aware of the homogenizations of these insruments and fico's or were they left in the dark?
There are two places for the investigators to check thoroughly. Only then will this most horrendus ROBBERY be figured out and divulged to the
1 AIG.
HAS ANYONE given any thought as to why an Insurance company(NOT EVEN A LENDER)was the biggest beneficiary to the almost ONE TRILLION TAXPAYER DOLLARS that were dolled out. It wouldn't have anything to do with LAWSUITES FROM FORIEGN INVESTORS WOULD IT?
Doesn't anyone want to know whom it was that decided to allow adulterated bundles of loans onto the market?
Go there and WE THE PEOPLE will find out the truth.
0 # IPACrank 2011-05-19 14:38
Let's cut to the chase. The entire system gov't,finance and media is owned by the jewish/zionist mafia. And you thought it was the Italians. Watch the AIPAC conference this weekend. Watch Obama swear loyalty to your masters. Noone is going to jail. They own you,me and our children. America is toast
+4 # Progressive Patriot 2011-05-19 16:13
Americans need to know that ISRAEL IS NOT OUR FRIEND!
+6 # GT 2011-05-19 15:07
I admire Taibbi's work - he writes engagingly, and it's clear that he is rightly outraged at what the corrupt financial/gover nment nexus has wrought.

But if he thinks anyone is going to jail, he is terminally naive.

Jail in the US is for untermenschen who consume proscribed plants and their derivatives, and for peons who refuse to lick the whip of the political class and their Myrmidons.

If it comes down to it, the financial class will gin up another war to divert people's attention - and they OWN the political class. All else is theatre.
+6 # Progressive Patriot 2011-05-19 16:12
The question I have about all of this is, what will it do for all of the people who have lost their homes? Will _they_ get anything out of it?
+5 # banichi 2011-05-20 00:04
ProPat, of course it won't do anything financially for the people who have lost their homes! I'm about to lose mine, after a 2-year battle to "save" it, underwater mortgage and all. Am I pissed? You bet! But I don't see what anyone can do about it, though I salute Taibbi's clear reporting and the AG of NY for having the balls to jump into it. Maybe I am just reflecting the defeatism that the banks and pro-bank politicos want to create, though!

If just exposing the bad guys was all it would take to break this whole thing open, Matt Taibbi's "Why Aren't the Bankers in Jail" and the documentary "Inside Job" would have provoked it by now, don't you think? I'm going to pray for Mr. Schneiderman, that he survives, and is successful.

But I can't help thinking that our Supreme Court is thoroughly politicized at this point as favor of the right-wingers.. ..
+4 # PublicRights 2011-05-19 23:45
Mr. Schneiderman was elected by millions of citizens (or 'shareholders', in the millennialist parlance), and thus has more legitimacy than all the banks and all Their fiat-credit-bli ps put together. No matter how many zero$ They tack on to the number, its the number of real people and real citizens behind the NY AG that matters.

Talking Fraud? Fractional Reserve Banking (FRB) is systemic fraud which allows the 'special people' to literally create money out of nothing, whilst not being busted for counterfeiting and conspiracy larceny (i.e. consolidation of ordinary citizens' property & property rights thereof).

This (in case anyone hasn't noticed) is the human rights issue of our day- like slavery to the early 19th century, or sexism to the early 20th.

Don't let them (the money gang) fool you; just because they've got all the money (an imaginary concept) in the world. It doesn't matter. They cannot fool all of the people all of the time.
+4 # JimYoung 2011-05-22 07:23
The main problem is that "money" never existed so they can't "pay it back," we can only try to get the bonuses, commissions, and debt instruments that have some fraction of the value they were sold for. How much of Madoff's billions were real? Rating agencies were corrupted, preventing one of our most critical limiters of irrational debt creation.
+1 # Jeff Smith 2011-05-24 23:02
While bankers deserve punishment, that won’t solve the systemic problem. The basic problem is society, rather than share the rents for land (mistakenly called “housing” values), allows this money stream to become the low hanging fruit for speculators. Why ever do we send this value -- spending for land -- to Wall Street in the first place? As long as society keeps feeding Wall Street so much free money, then Wall Street will remain corrupt.

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