The Art of War and the national mortgage settlement

“You know, I’m a conservative, Republican, mother of three, Catholic, own my own business,” says Tisha Black-Chernine.

But she is also a consultant to the Nevada Attorney General’s Office and was inside the room when the final deals were being cut in the so-called “national mortgage settlement,” in early February.

Nevertheless, insists Black, she’s no zealous consumer advocate who thinks that giant corporations are terrible.

What started her down her current road, she says, was what she was observing in her real-estate law practice a few years ago — and what she was finding herself saying.

“I thought, hey, I don’t want to talk about this, because I don’t want people thinking I’m a conspiracy theorist.”

Eventually, however, she simply concluded: “These people are just friggin’ cheating. And nobody’s doing anything about it.”

“These people” were the big banks and their affiliated servicers.

Nevada Journal decided to interview Black — “Tish,” as she’ll insist you call her — after examining the detailed settlement documents that the Obama administration and 49 state attorneys general filed with the U.S. District Court in Washington, D.C., last week.

The sheer scope of the releases from civil prosecution that were sought by the banks’ lawyers — and agreed to by the U.S. Department of Justice, federal regulators and state attorneys general — is stunning.

The federal releases — covering every conceivable kind of mortgage-related bank abuse you’ve ever heard of in the last few years — take up eight and a half pages of each proposed consent judgment. Another four pages are devoted to the civil offenses that the state attorneys general promise not to prosecute.

Altogether, they lend credence to a phrase Black uses: a culture of lawlessness.

America’s biggest banks — Bank of America, J.P. Morgan Chase, Citigroup, Wells Fargo and Ally/GMAC — are asking the D.C. District Court to approve the pacts.

More than once, Wall Street security analysts have described this so-called settlement as a good deal for the banks. And clearly the banks and their lawyers agree, since they negotiated hard and long to get the agreement.

Tish Black also was impressed with the masterful level of strategic thinking coming from the banks and the quality of lawyering coming from the banks’ attorneys.

The way they fashioned the whole multi-state settlement, she says, had something like technical genius to it — almost a kind of beauty.

The banks’ attorneys — she calls them TBLs, for “Tall Building Lawyers” — quite intelligently never sought to compromise any individuals’ right to sue for civil damages. Nor, she points out, did they try to settle, in advance, any criminal charges.

They knew, Black argues, they didn’t have to: During the last four or five years, although the ammunition for critics of the banks has grown ever-more plentiful, not one criminal indictment of a big-time banker has been seen.

“So, just going on history alone, that’s probably not likely to happen, right?” she asks. Assuming the banks’ voice, she says, “Why not give that up?”

It was the same story on the citizens’ right to sue: Such suits, statistically, have not been any significant threat.

“Our real threat,” she believes the banks were telling each other, “is that these state AGs get together and start head-slamming us. So, that’s really what we need to [take care of].”

“It’s The Art of War, right?” she asks. “If you’re in the battle, you’re gonna try to blow out the biggest threat. And the biggest threat [was] the AGs suing them on a civil level — hands down. Period. Period. Period.”

The next question the bankers asked themselves, she believes, was, “Okay, what can we give the AGs?

“Well, everybody’s hurting. We have money. Let’s give the AGs some money.”

So, says Black, “every single state got a slug of dough that they could do whatever the hell they wanted to with.”

Moreover, that big “slug of dough,” was usually generously placed under the personal control of the state’s attorney general.

At the same time, Obama’s Department of Justice was pushing the attorneys general hard to agree to the settlement the banks wanted, while cheerleading for its terms.

“It was pretty amazing,” says Black. The federal government said, “You need to decide whether you’re in or out by the time we do this press release.”

According to Nevada Attorney General Catherine Cortez Masto herself, interviewed by KNPR last week, the settlement was still being finalized when the public-relations people were starting to talk it up before the media.

Given all the high-powered lawyering and the almost-certain likelihood that the U.S. District Court for the District of Columbia will approve the settlement, does Black see any areas where the pact might appear vulnerable?

One area of the settlement that has angered many holders of mortgage bonds, she says, is where “banks gave themselves tax credits, for writing down somebody else’s property.”

That, says Tisha Black, will probably not stand.

She also wonders why more attorneys general have not followed Cortez Masto’s lead and unleashed criminal prosecutions.

Finally, although not discussed by Black, there’s a serious related question that her comments bring up:

Could this “victory” that the banks achieved — with the energetic support of the Obama Department of Justice, it must be noted — turn out, ultimately, to be only Pyrrhic?

More specifically, what kind of consequences will this pact have in the long run for the credibility of the big banks — and for the willingness of intelligent Americans to ever again put much faith in them?

As the Securities and Exchange Commission recently argued, a bank’s pursuit of a consent judgment is effectively a nolo contendere, or “no contest,” plea.

And what distinguishes a nolo plea, notes, is that “the defendant accepts the punishment for the crime without admitting or denying his guilt.

“In other words,” the site continues, “you don’t contest or challenge the charges, and you don’t admit to committing the crime or even deny it, but you let the court sentence you for committing the crime.” (Emphasis added.)

But for banks, from the very beginning of banking, the question of reputation was seen as critical: Could you trust them with your money?

Now, however, America’s biggest banks — standing on a very high-profile stage and under bright lights — have chosen to not even contest the widespread opinion that they’re “cheaters.”

And that would seem to make it unlikely that this so-called settlement, in the long run, will really settle much of anything at all.

Steven Miller is the managing editor of Nevada Journal, a publication of the Nevada Policy Research Institute. For more in-depth reporting, visit and

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