Remember the National Mortgage Settlement attorneys general made with big banks, to drop litigation for the paltry sum of $25 billion? The popular notion was that big banks had received legal immunity from further action. This was never true. Last Sunday's New York Times catalogs a storm of new litigation by regulators, prosecutors, investors and insurers.
That article should lay to rest any certainty that the big banks got away clean for a few billion in chump change, because the new wave of lawsuits move into the hundreds of billions, according to the New York Times article.
The article gets more interesting with the news that "Adding to the legal fracas, the New York attorney general, Eric T. Schneiderman, accused Credit Suisse last month of perpetrating an $11.2 billion fraud by deceiving investors into buying shoddy mortgage-backed securities."
While Schneiderman himself has shown little appetite for any actions other than lawsuits -- fraud is a crime. So while investors and insurers and regulators can only file lawsuits over fraud, prosecutors can move on to criminal charges. In the 1980s many of the savings and loan bankers were criminally convicted, about 1,100 of them.
Will a repeat of this happen now that Obama is in his second term? Will he cock his ear to the roar of the crowd? The American public was already in the mood to see big bankers take the handcuffed "perp walk" in early 2011, when Treasury Secretary Timothy Geithner unexpectedly observed the "very deep public desire for Old Testament justice."
That public desire has not faded. Last week at a crowded table I mentioned how nice it would be to turn on the TV and see Wall Street lined with black SUVs, each with the FBI logo on the side. Every single person at the table, liberal and conservative alike, shouted "SUVs? How about buses?!"
We are now looking towards Barack Obama to show us his true agenda in his second term. Will he wimp out? Or will he let FBI evidence be put to use, tell Attorney General Eric Holder to get his rump in gear, and show us massive prosecution for massive fraud?
I don't know that Obama will lead the charge to justice. But seeing this surging wave of litigation, perhaps he will have what it takes to grab his surfboard and catch the wave.
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