I was just on KPFK in Los Angeles with RJ Eskow, and we have fairly similar ideas about the foreclosure fraud settlement, even though they may sound different. He thinks that we need to use the pressure available to ensure that the settlement is a beginning and not an ending. I’m just trying to be realistic about what the settlement means. But one area we agreed is that the lack of deterrence implied by this settlement is absolutely corrosive for the future. Eskow described it as socially corrosive, and a way that people lose faith in their government. I concur completely.

It’s not just that a failure to prosecute makes it more likely that the same bad actors engage in the same bad actions over and over again. It’s not just that this furthers a financial oligarchy that has been historically responsible for most major economic crises in this country. It’s that a two-tiered system of justice is terrible for civil society.

I really only have one question. “Will we put people in jail?”

I think you can divine what I think of the foreclosure fraud settlement, which releases liability on a host of fraudulent conduct for only a $5 billion guarantee from the banks, as well as $20 billion made up mostly of “credits” that HUD believes will translate into around $34.5 billion overall. The credits play out over three years, so you can adjust for inflation, and in fact if you adjust in that way, as Matt Yglesias does, you find that this is around 10 times less than the tobacco settlement of the late 1990s.

But there’s justice in the form of just compensation and there’s justice in the form of, well, what justice is always described as in a criminal context – deterrence. No financial penalty will do as much to prevent future conduct of this type as a senior executive being sent to jail. And the failure of having accountability on that level is like a festering wound at the heart of our politics.

The STOCK Act was a media-driven bill that politicians felt they could not resist after 60 Minutes ran a (somewhat flawed) exposé on the insider trading activities of members of Congress. Once a must-pass bill like that gets into circulation, it’s going to become an attractive target for messaging amendments where members try to hitch a ride with their pet issues. And because Congress is held in low public esteem, the best of these amendments would deal with the same kind of ethics issues.

Four years ago, the bank Credit Suisse Group announced investigations of traders for misleading investors on the value of mortgage bonds. After four years, the US Attorney just got around to announcing indictments of the same people Credit Suisse handpicked as responsible. The announcement occurs just as the Administration wants to prove their bona fides on financial fraud, with their shiny new task force and everything.

Pro Publica, in conjunction with NPR, reported that Freddie Mac invested millions betting against home owners paying their mortgages, meaning that had a conflict of interest in helping owners refinance to avoid foreclosures. That’s somewhat tangential to what Eric Schneiderman wants to delve into because it’s post-crash conduct, but it still shows the element we’re dealing with and how many revelations are already out there

Douglas Holtz-Eakin, a Republican commissioner on the FCIC who did not sign onto the final report, made some statement to the media about how the FCIC already investigated the areas of inquiry concerning the crash of the housing bubble and found no criminal wrongdoing. But the Chair of the FCIC, Phil Angelides points to the FCIC’s report noting there were criminal referrals, and that was a year ago.

New York Attorney General Eric Schneiderman continued his MSNBC tour by joining Chris Hayes on his Sunday morning show. These interviews really aren’t that good to conduct for TV. If you don’t assume a certain facility with the material on the part of your audience, you end up recapitulating a lot of what we already know, and never get around to asking new questions about the matter at hand, namely the RMBS working group and its powers. But Hayes, because he had an extended period of time, managed to get three key points out of Schneiderman:

Eric Schneiderman, co-chair of the newly titled “RMBS working group” investigating financial fraud, appeared on the Rachel Maddow Show last night (the interview starts around the 5:00 mark), and there were a few interesting moments. First you have his assessment of the the fraud involved here, which he definitively cast as a pre-crisis issue. Schneiderman, from his public statements, is less concerned with the faulty documentation used to foreclose on borrowers; I would imagine he sees this as the cover-up for the initial crime of securitization fraud, and going back even further origination fraud. He sees that as where the banks’ real exposure lies. And so the working group will look at “all of the conduct that blew up the economy,” not the conduct being engaged in to paper over (literally) all that.