The Cost Of Attorney General Silence: How Bank Of America Made Sure There Would Be No Surprises In The Robosigning Settlement
For those needing yet another reminder of how in America the incestuous conflicts of interest between the various branches of government and Wall Street run to the very top, here is Time with an article highlighting yet another example of impropriety. Today's case focuses on Iowa’s Democratic Attorney General Tom Miller, who at least superficially took the noble lead on the investigation by all 50 state attorneys general into the “robo-signing” foreclosure scandal. Alas, one look below the surface reveals that we may be days away from a very ignoble and very BAC-friendly settlement, courtesy of a few backroom "arrangements" brought to you by none other than Bank of America's petty cash account.
Last fall, just after he made the announcement that he would look into the foreclosure mess, contributions to Miller’s campaign coffers for November’s election soared, thanks in large part to out-of-state lawyers who make a living representing big banks, a new report from the National Institute for Money in State Politics finds. “Nearly half of the money Miller raised in 2010,” NIMSP reports, “was donated after the October 13 announcement that he would be coordinating the 50-state attorneys general investigation.”
Two Miller contributors have become directly involved in defending the banks in the probe. One, Meyer Koplow of Wachtell Lipton in New York, gave Miller $5,000 and is representing Bank of America in direct negotiations with Miller, the attorney general tells TIME. Another, Elizabeth McCaul of Promontory Financial Group, gave Miller $10,000 and is consulting Bank of America in the negotiations, Miller says. Bank of America was one of the first and most prominent institutions accused in the foreclosure investigation. It gave more than $80,000 to the Democratic Attorney Generals Association, which spent more than $200,000 on Miller’s campaign, Miller says.
That this "revalation" comes at such a time is unpleasant for a process that is now sure to be mired in shades of political corruption and backroom dealing, especially if the settlement outcome is one that will be seen as favorable toward Bank of America.
The NIMSP report and revelations of campaign contributions by those working for Bank of America come at a sensitive moment, as Miller is in the thick of far-reaching negotiations with the banks. Though the case started as an investigation into robo-signing, it has broadened. The talks are aimed at a settlement that could set the terms by which banks service current and future home loans, and determine how they foreclose on properties. That could complement, or supercede, a settlement between banks and federal regulators reached earlier this year.
Talks over monetary aspects of a potential settlement between the AGs and the banks are just getting under way. New rules for banks writing down mortgage principal and the establishment of a bank-paid fund to help with loan modification are on the table. Some reports have potential bank payments reaching $20 billion but sources on both sides suggest that number is high. The breadth of the negotiations has caused seven Republican attorneys general to split with the 43 other AGs.
Of course, there always is another side to the story:
In early March, American Banker published a 27-page term sheet
that Miller and the other attorneys general had presented to the banks
in the talks. “We’ve had negotiations and have agreement on some of the
terms but no overall agreement,” Miller says.
Miller objects strongly to the NIMSP report. “It is extremely false
and misleading,” Miller says. He disputes the report’s assertion that
many of his campaign contributors have a “vested interest in the final
terms of the settlement.” Other than Koplow and McCaul, none of the
other lawyers named as campaign contributors in the report are involved
in the case and none has an interest in the settlement, Miller says.
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