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FEATURE SECONDARY MARKET its correspondent lending unit, Morgan Stanley selling Saxon, and Goldman Sachs handing off Litton. Just this year, Citigroup drew down market activity in the bro- kerage channel and MetLife left the forward mortgage origination business. The life insurer cited an "uncertain marketplace and regu- latory environment" that helped make home loans less profitable in a statement last fall. "The drip-drip-drip of more threats and investigations may make lenders less likely to lend," he adds. But others say the rap wrongly falls on more than just big banks and the economic recovery. Pinto fingers the "affordable housing craze" that federal offi- cials of all types—from Congress to HUD political appointees and former presidents—fed by charg- ing Fannie Mae and Freddie Mac to keep underwriting standards loose, mortgage loans plentiful, and an eye turned the other way—or at least toward low-in- come and minority homebuyers. "The government needs to fess up for what it did, and then step back and say it's time to actually solve the problem," he says. "We're not going to solve the problem by destroying the mortgage industry." Not that this is an isolated view. At the height of the crisis, in 2009, The Guardian pointedly published a who's who of 25 poli- ticians and bureaucrats chiefly responsible for bad policies that helped inflate the housing bubble and gave incentive to servicers who eventually bet big on bad mortgage-backed securities. The list—a bipartisan one—goes after the likes of former President Bill Clinton for repealing laws that strictly separated com- mercial banking activities from investment activities, and Alan Greenspan, which it excoriated for keeping interest rates low, advocating for variable mortgages, and shrugging off concerns about the subprime loan bubble. Adds Pinto: Government officials "should look into the New York Attorney General Eric Schneiderman speaks at the Justice Department in Washington, Friday, Jan. 27, 2012, following Attorney General Eric Holder's announcement of the formation of the Residential Mortgage-Backed Securities Working Group. (AP Photo/Cliff Owen) mirror and see who's really at fault here." Missal demurs about the no- tion of a wider investigation a la Watergate, citing the "good faith" principle needed to build a criminal case against someone for negligence or ill intent. "In these situations, you have to show these people had knowledge, that they had a role," he says. In other words, bad policy doesn't equal criminal conduct. Wishful thinkers should forget about seeing Clinton hauled before a congressional committee or a case involving Greenspan on the docket. And what of the ratings agen- cies, criticized by so many for granting foolproof AAA ratings to junk subprime loans and securities? Platt says that "anyone with the agencies . . . has to be concerned that their past activities could be subject to further scrutiny," but nods at the ability of Fitch Ratings, Moody's Investor Service, and Standard & Poor's to elude a serious legal challenge so far. Just Work T he evidence builds a case that recommends reservations for the Working Group. While the task force's purpose involves coordinating cases and investigations already under way, experts believe it snagged a mention in the State of the Union address for peripherally political reasons—and that it could wobble confidence in the recovery. Pinto warns that new task forces and settlements will only undermine confidence and risk in a cornerstone of the economy, with the servicing industry set to suffer the failures but few of the rewards as feds preserve strict underwriting standards and taxpayer-backed guarantees. "We've taken an industry that suffered through boom-and-bust cycles, put it on steroids with government policy, and made sure it will not survive in any form," he says. Missal believes action will follow word. He goes back to cases that resulted from the savings and loan crisis. "When it gets this much attention, actions typically follow," he tells us. Even if more cases show up, the announcement—at least initially—fails to satisfy those in favor of the Working Group's ostensible goal. Pension funds, individual investors, and ambitious state attorneys general continue to file suit against alleged wrongdoers, they say, but show us a servicing executive behind bars—without the golden parachute. Frankel ended her article with a plea for the elite task force to name names, disclose wealth wrought from damaged lives and investments, and build a case to show just why the economy fell apart four years ago. "That's what I want," she wrote. "But I'm not holding my breath." Speechwriters, take note. THE M REPORT | 77 ORIGINATION SERVICING ANALYTICS SECONDARY MARKET