When I was a kid growing up in the Bronx the U.S. Supreme Court always seemed to be above reproach.

Maybe my friends and I were naive, but I think maybe times have really changed. The Supreme Court, once a glaring symbol of constitutional democracy, has now been pulled into the day to day mudslinging of the political process.

To me, as a lawyer that is a true shame. The aura of neutrality around the Supreme Court has evaporated, and now the American public views it through the same partisan-colored glasses as it does the other two branches of government.

A new survey out this month shows the Supreme Court ‘s approval rating at a 25-year-low. The Pew Center for the People and The Press surveyed over 3,000 Americans, and just over half of them (52%) gave the Court a favorable rating. That is down from 58 percent just two years ago, and down from a high of 80% in 1994.

Why? Because the rule of law is no longer the only thing that matters inside the courtroom.

For me it starts with the Court’s ruling on Citizens United vs. FEC. A flurry of Super-PACs and their so-called ‘secret money’ now dominate the national political landscape, because of the 2010 decision that now ratifies their existence and equates corporations with people. If elections are taking an even more negative tone than usual, the court must accept some level of blame.

Some of the language from the recent hearing on health care seemed more appropriate at a Tea Party rally than at our nation’s highest court. Another survey by Bloomberg shows 80 percent of Americans believe that politics, and not the cases’ legal merits, will decide the outcome of Obama’s healthcare legislation.

The court seems more willing than ever to step into the political arena, and the justices ideologies, which should be well-guarded secrets, are on permanent display. Adding insult to injury is their own reckless conduct by attending unseeming junkets connected to conservative and liberal interest groups that at a minimum that create the perception of impropriety.

As my good friend and fellow attorney Allen Kluger said, “I have never seen the Supreme Court as political as it is now.”

Politicians on both sides have accused the justices of political activism. The perception is there that money, politics, and influence, three things that have no place in the Supreme Court, are now allowed at the table.

Right or wrong, our government has done little to dispel that notion, and it has stuck.

These criticisms do not only apply to the US Supreme Court but to the state supreme courts as well.

Here in Florida special interest groups are targeting our justices the same way they do political candidates, simply because their rulings don’t fall into line with their own political ideologies.

And certainly the Florida justices don’t do themselves many favors, as the controversial Roman Pino case certainly carried the whiff of partisanship.

Courtrooms are becoming more polarized than I ever remember, and time and again it appears that power, influence and connections are more important to some than the rule of law.

From The Trenches,

Roy Oppenheim

Courtesy:Cesar Cabrera Photography

When President Obama stood before Congress and the American People three months ago and promised to hold those behind the housing crisis ‘accountable’, I was hopeful.

In the days that followed, his new field general Eric Schneiderman was unveiled and almost immediately action was taken.

When Schneiderman issued subpoenas, just days after the President appointed him to run his new Residential Mortgage-Backed Securities Working Group, I thought that perhaps, FINALLY, a corner had been turned.

But it’s becoming clear to me now that the train that is the RMBS Working Group hasn’t left the station, and depending on who you believe, there may not even me a station built yet!

After those few weeks of full-court press by Schneiderman, there hadn’t been a peep about the status of the Working Group’s investigation. Yes it may have only been three months, yet I fear that the bold vision you and I were sold might turn out to be just another empty promise.

The press only turned its attention back to the Working Group after a brutal Op-Ed in the New York Daily News. The co-directors of the Metro Industrial Areas Foundation, a citizens coalition group, called Schneiderman out and said they had yet to see any footprint of the RMBS Working Group’s investigation.

The 55 staff members promised by Attorney General Eric Holder were nowhere to be found, the pair claimed.

Yet even this Op-Ed could only draw Schneiderman’s mouthpiece out of the woodwork, rather than the Attorney General himself.

Spokesman Danny Kanner refuted their claims, saying that attorneys and other investigators had already been hired, that we shouldn’t draw any conclusions by the lack of public announcements.

“Given most investigatory matters are privileged and confidential, it is simply premature to draw conclusions about the Working Group’s scope and scale of inquiry,” Kanner told “The Nation” via email.

Under normal circumstances that might be true, but if we are to believe the President wasn’t just placating homeowners, as so many politicians have done before, don’t we deserve a transparent, above-board investigation?

There needs to be a public urgency on the behalf of the federal government, if we are to believe this task force isn’t just another dog and pony show.

The skepticism over this latest investigation is about to bubble over, and while I would never want public pressure to dictate the terms of any prosecution, the Justice Department has to know this is a crisis unlike any other.

When the Feds investigated the Savings and Loans, thousands of FBI agents were involved. To investigate the fraud at Enron, a SINGLE company, we got 100 investigators on the case.

The fraud-closure crisis has devastated more families than either and left our economy a wilted mess, so the Justice Department owes homeowners nothing less than full assault on the Too Big To Fail Banks.

Whether or not these 50+ investigators are actually on the clock, it’s not enough. There have been some reports the Justice Department will indeed hire more staff, but Schneiderman and Holder are losing whatever goodwill they created by continuing to sit on their hands.

So much time has been wasted, and the public should not be expected to continue to wait while banks turn increased profits.

Maybe President Obama meant what he said back in January, and I hope Eric Schneiderman has not been co-opted by the very forces he promised to investigate.

But whatever steam was generated by the announcement of the Residential Mortgage-Backed Securities Working Group has evaporated, so the feds need to step in front of the investigation and remain there.

From The Trenches,

Roy Oppenheim

Homes need to be occupied.

That is the bottom line.

Today’s housing market needs a dramatic overhaul and it’s been long overdue for a fix. So we don’t have the time to be contemplating moral hazards anymore.

So I’m OK with President Obama extending mortgage assistance to owners of multiple homes.

According to Bloomberg, the administration will open up the Home Affordable Modification Plan, or HAMP, to these additional borrowers starting in May.

Borrowers who qualify for HAMP can have their monthly payments reduced through lower interest rates, longer mortgage terms and forgiven principal.

Landlords can apply for loan modifications for up to 4 mortgages as long as they rent out the homes or plan fill them, according to Bloomberg, who says about 700,000 landlords might qualify.

This has angered some, who are saying the administration is rewarding speculators who may have caused the housing market to collapse, and should focus solely on those who haven’t been able to pay their mortgages because of financial hardship. In a dream world, they would be right.

The problem with that notion is while speculators may have played a role in the housing market collapse, I still lay most of the blame squarely on the banks. You might say a so called ‘house flipper’ was only buying homes to pad their bottom line, to which I respond, what exactly do you the banks were interested in?

They were the ones engaging in rampant fraud, not the speculators.

I must again go back to this 60 Minutes piece about abandoned homes rotting their neighborhoods from the inside out. Banks response to these vacant properties has been to walk away from homes and allow them to go to waste.

If that is the alternative, then I will gladly welcome a house-flipper into my neighborhood.

They still make better neighbors than the banks.

Besides, there are renters out there who need to stay in their homes, and just like many borrowers, they too have hard-luck stories that rival if not surpass those of people who have lost their homes to foreclosure.

And not every multiple property owner is a speculator. Many are also just regular working Joes or people who were using the real estate market as a source of retirement income.

The housing market is in real trouble, and it won’t turn around unless we stop looking concerning ouselves with the theoretical construct of moral hazard and start paying attention to the bottom line.

After all who got bailed out just a few short years ago? It wasn’t the homeowners but rather the banks.

If the possibility that a ‘buy and flip’ investor might get mortgage relief is the chance this government has to take in order to keep renters in their homes and get the housing market turned around, than I say it’s a chance worth taking.

Like the characters in "The Blair Witch Project", the banks are running scared!

Well what a wild week it has been. When we came to work on Monday we feared President Obama would put the housing crisis to bed without ever holding the banks’ feet to the fire.

The settlement with the banks, which we have blogged about ad nauseam this week, seemed as sure as a chip-shot field goal.

But thanks to President Obama’s suddenly get-tough approach, as evidenced by his State of the Union speech, we’ve seen the banks’ kick go wide-right and now all bets are off.

Can There Be Real Change In Mortgage Industry?

Now we are not completely sold that things will play out exactly as homeowners would like, this is of course the federal government we’re talking about, but for the first time we have a true sense of optimism. The President may finally be seeing things our way, and we want to throw our full support behind him.

There is no doubt cages have been rattled in the mortgage industry, and nerves have been frayed. If Obama’s plan to re-write the foreclosure rules didn’t have some kind of teeth, then we doubt we’d be seeing the type of reverberation thorough the media and the top echelons of government that we’ve detected in the last few days.

Banks Are Fearful of Settlement Collapse

The settlement could be falling apart at the seems, at least JPMorgan Chase CEO Jamie Dimon thinks so. He told CNBC this morning that Obama’s announcement to investigate the packaging and servicing of mortgage loans could stop the settlement cold.

“It has a pretty good chance of derailing it,” Dimon said in a televised interview from Switzerland, adding later, “I think it would be better for America if the settlement took place.”

Guess Dimon hasn’t been reading the South Florida Law Blog. You and I know it would be better for the BANKS if a settlement took place now, and we suspect Dimon knows that too.

From the moment the details of the settlement became public, there was push back from some of the Attorneys General, the legal community, and the media.

The New York Times mirrored our thoughts, in this Op-Ed piece published in Thursday’s paper they also wondered if this was finally the investigation that would end with criminal prosecution and dare we say, jail time.

New York AG Promises to Leave No Stone Unturned

The importance of the appointment of New York AG Eric Schneiderman, which we mentioned yesterday, can not be understated. His new unit, which will answer to the existing Financial Fraud Enforcement Task Force, will be composed of members of the Department of Justice, the SEC and the IRS. It will also be working with the existing hierarchies of those organizations. So his reach will be far and wide, and we believe this investigation has the potential to do some real good.

Schneiderman, along with California AG Kamala Harris, have been some of the most outspoken critics of the settlement, and he is promising a thorough investigation of ‘every aspect of the conduct that created the bubble and crash’.

To us, those words ring true. Obama is embracing real change with his appointment, and we can’t wait to see what happens next.

The President is well aware of the uphill battle he faces when it comes to convincing voters and campaign financers that his economic policies and regulations have not only been what we needed the past three years, but also what we need in the next four. According to The New York Times, President Obama has already started reaching out to the skeptical financial industry on Wall Street, hoping to win back one of his most vital sources of campaign cash.

While many on Wall Street view the President’s financial rhetoric as unfair to their industry, his apparent goal is to prove that his fiscal policies have helped to bring the banks and financial markets back to health and toward sustained growth.

The argument goes that the economy would have been dramatically worse at this stage had the Obama administration not taken the action it did in the wake of the real estate and financial crisis.

But how do you prove a negative? You can’t.

Historically, recessions have been ended by a wave of homeowner refinancing that predictably follows a lowering of interest rates. The President faces a number of obstacles to accomplishing a refinancing boom, however.

First, the number of homeowners who are underwater continues to rise.

Second, the banks have no motivation to lower interest rates of homeowners who are stuck in their homes.

Our current refinancing and banking system is stacked against the premise (and promise) that refinancing would push cash back into the economy, spur a consumer stimulus, and in turn promote spending, job creation and financial growth.

Too many people with good credit and jobs are stuck with high interest rate loans. The President would be wise to focus on developing a system for refinancing homeowners to stimulate an organic bailout of our financial crisis.

The fact that the President has more work to do to bring the country out of its funk and needs a different path to economic growth is backed up by a recent Time Magazine article debunking the myths of the new American economy.

Myth #1: This is a temporary blip, and then it’s full steam ahead.
The vast majority of economists do not believe we are on the way to a double-dip recession, but avoiding a double-dip is not the same as stimulating economic growth strong enough to revive the job market. The fact is that estimates point toward a five year recovery time before we return to a healthy unemployment rate of 5%.

Refinancing borrowers with strong credit and jobs could help speed up the process.

Myth #2: We can buy our way out of this.
Widespread government stimulus for loan modifications isn’t effective if homeowners don’t have jobs that allow them to make payments at all. There has been a decline in foreclosures, but the supply of foreclosed homes continues to undermine the national real estate market and dampen consumer spending.

The previous federal stimulus attempts have focused too much on homeowners who were already in trouble with their mortgages. While these homeowners certainly need help, shifting the focus to encourage refinancing of borrowers not underwater on their mortgages would allow this group to put its savings back into the economy. As the saying goes, “A rising tide lifts all boats.”

Myth #3: The private sector will make it all better.
Companies are making plenty of money. The problem is that they aren’t spending it to hire American workers. According to Time, American companies generated $1.68 trillion in profit in the last quarter of 2010 alone. Clearly, it’s a myth that American companies are waiting for economic and regulatory “certainty” before investing at home.

Myth #4: We’ll pack up and move for new jobs.
Most people couldn’t afford to move if they wanted to because they are underwater on their mortgages. While there are currently 3 million job openings, an additional problem is that the current labor pool’s skill set doesn’t match up with available jobs.

Myth #5: Entrepreneurs are the foundation of the economy.
New business creation has been shrinking since the 1980s. Is it coincidence that this started just when the financial sector began to explode? Lenders still aren’t lending, and the old methods of self-funding new business ventures through home equity loans or maxing out credit cards are no longer viable.

‘Hope’ was the foundation of President Obama’s victory in 2008.

The reality is Americans are still hoping for change.

The question is whether the President, or anyone for that matter, will be able to deliver.

Right now, it looks like if you want a bailout you better have your own plan in mind.

From The Trenches,

Roy Oppenheim

Mortgage Rates Set Fresh 2011 Low After Jobs Report

Fixed rate home mortgage loans dropped for the eighth straight week to a new low for 2011 amid concerns of another economic slowdown this year, according to data from Freddie Mac and a report by The Wall Street Journal.

The 30-year fixed-rate mortgage averaged 4.49%, down from 4.55% last week and 2010’s 4.72% average. Rates on 15-year fixed-rate mortgages fell from 3.74% to 3.68%. 15-year fixed-rate mortgages averaged 4.17% in 2010.

Lawyers Get More Time to Finish Foreclosures

Florida foreclosure defense is translating into more time for plantiff bank attorneys to complete a foreclosure, according to an article in the Palm Beach Post.

Due to the reality of Florida’s overloaded court system and swirling questions surrounding the validity of foreclosure paperwork, Fannie Mae is now allowing bank attorneys up to 450 days (about 15 months) for lawyers to complete a foreclosure before fines are levied. The previous time limit was 185 days, or about six months.

The increased time needed to complete a foreclosure legally and correctly against a homeowner is due in large part to Florida foreclosure defense attorneys working to protect the rights of South Florida homeowners, according to Roy Oppenheim.

Obama Blames Wells Fargo, Bank of America, Chase for Modification Failures

The three largest U.S. mortgage lenders are getting some heat from the Obama administration for the failures of the federal foreclosure-prevention program, according to The Associated Press.

The lackluster performance of Wells Fargo, Bank of America and Chase with helping homeowners lower their mortgage payments has led the Obama administration to remove financial incentives it had given these lenders.

Only about one-third of the 1.4 million people who applied for mortgage modifications through the federal program have had their payments lowered permanently.

Angry Homeowners ‘Foreclose’ on Lenders

Owners of a house in Florida have engineered a “reverse foreclosure” against a Bank of America branch in Naples, according to The New York Times.

The homeowners paid $165,000 in cash to buy their home from the bank and never borrowed against it. But last February, the bank began foreclosure proceedings against them. The homeowners hired a Florida foreclosure defense attorney and the case against them was dropped, however they were able to recover a judgment for $2,500 in attorney’s fees against the bank.

When the bank didn’t pay, the homeowners’ lawyer showed up at the bank with sheriff deputies and a moving truck to clean out the building.

The bank eventually settled with the homeowners for more than $5,700 to cover the fees and additional costs.

Glenn Greenwald of Salon.com called Barofsky “easily one of the most impressive and courageous political officials in Washington” for his willingness to stand up to some of the most powerful people, institutions, and special interest lobbies in Washington and Wall Street.

On March 29, before his departure from office, he wrote a piece for the New York Times titled “Where the Bailout Went Wrong.” The piece, so vicious in its criticisms of the TARP program and politicians in Washington, prompted the Wall Street Journal to run excerpts from it along with their own commentary on the TARP fiasco.

Of the failed bailout Barofsky wrote:
“Two and a half years ago, Congress passed the legislation that bailed out the country’s banks. The government has declared its mission accomplished, calling the program remarkably effective ‘by any objective measure.’ On my last day as the special inspector general of the bailout program, I regret to say that I strongly disagree . . . Almost immediately [after passage], as permitted by the broad language of the act, Treasury’s plan for TARP shifted from the purchase of mortgages [that would have helped everyday homeowners] to the infusion of hundreds of billions of dollars into the nation’s largest financial institutions, a shift that came with the express promise that it would restore lending.”

Free money to banks, “free for all” (except homeowners)
The Treasury, however, provided the money to banks with no effective policy or effort to compel the extension of credit. There were no strings attached: no requirement or even incentive to increase lending to home buyers, and against our strong recommendation, not even a request that banks report how they used TARP funds.

Barofsky concluded with the following:
“[The] Treasury’s mismanagement of TARP and its disregard for TARP’s Main Street goals – whether born of incompetence, timidity in the face of a crisis or a mindset too closely aligned with the banks it was supposed to rein in – may have so damaged the credibility of the government as a whole that future policy makers may be politically unable to take the necessary steps to save the system the next time a crisis arises. This avoidable political reality might just be TARP’s most lasting, and unfortunate, legacy.”

Crash, burn, what next?
These failings of the Treasury have also resulted in larger banks that control a larger portion of our economy. This asks the question, why should the banks do anything different the next time around? In exchange for almost crashing the entire world economy, they come out larger, richer, and virtually guaranteed of future bailouts if governments want to avoid economic depression. Indeed, according to Barofsky, credit rating agencies are now taking into account the likelihood of future bailouts when determining the financial health of a company.

We salute Neil Barofsky and wish a great public servant the very best.

From The Trenches
Roy Oppenheim

PS: I’m flattered to be nominated in three categories for the South Florida Sun-Sentinel’s Best of Blog Awards this year! If you like the South Florida Law blog or our Twitter feed @OpLaw, please take a minute and vote! You can vote for each category once per day. Thanks!