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Schneiderman’s Big Bank Bust-up

The buzz is strong for the lawsuit against JP Morgan Chase/Bear Stearns helmed by Attorney General Eric Schneiderman. These big banks, whose devious and unlawful acts were the genesis of this nation’s most recent recession, may finally get their comeuppance and serve as a template of exact consequences for other guilty corporations. But Schneiderman’s questionably-written suit, which has been accused of being inaccurate and the fact that no individuals have been laid blame as defendants, feels like a dance that goes one step forward and two steps back. Even if the case is won, it may be shareholders and taxpayers who end up picking up the tab. Is it all in vain, or will justice finally be served?

Schneiderman, along with his Mortgage Fraud Task Force formed earlier this year, claims that Bear Stearns’ lending agent, EMC Mortgage, defrauded investors who purchased mortgage securities packaged by the companies from 2005 through 2007. The suit comes on the heels of last year’s suit by Ambac Assurance Corporation, a mortgage insurance company that filed a private grievance last year. Ambac attempted to incriminate Bear Stearn’s top five executives, including “one of the worst CEOs of all time,” Jimmy Cayne, who all pocketed over a billion dollars in stock sales and cash bonuses. Ambac was ultimately denied the ability to name names in its suit, which may explain why the Attorney General hasn’t taken this route. But the fact that no one is called out in Schneiderman’s suit makes it seem like we’re just pointing fingers at phantoms. And will the people who lost homes because of the banks’ criminal activities even recover what was lost? Unlikely — if there’s no one named to serve consequential jail time, there will be no one held responsible to pay back any funds illegally acquired.

So what does this mean? If the suit falls through because of shoddy research, will it hurt the chances of more realized efforts to prosecute big banks? Will anyone be forced to take accountability for our economic crisis? Bank of America recently agreed to pay a $2.4 billion settlement after a lawsuit from Merrill Lynch shareholders, but where does this leave the average citizen who was a victim of these mortgage scams? Ultimately, there’s no guarantee that forcing executives to pay their dues will right the wrongs of our troubled economy. While the culprits should be held responsible, there is a dire need to focus on changing the system so that this never happens again.

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