A Missouri grand jury handed down multiple felony indictments for foreclosure fraud on Monday. That's the same kind of crime being negotiated in nationwide settlement talks with America's big banks. If people can be indicted for doing it, why should bankers be allowed to write a check and walk away?

"Robo-signing" is the nickname that's been given to the practice of hiring large groups of inexperienced workers (they called them "Burger King Kids" at JPMorgan Chase) to file false statements with local courts in order to process foreclosures. In a typical "robo-signing," someone signs a statement testifying that they had personally reviewed documents that prove the bank has title to a home that's being foreclosed — and might do that many times every hour. That's either perjury or forgery, depending on the way in which the "robo-signing" was done.

Forgery and perjury are serious crimes. It's an even more serious crime to ask others to do it for you.

Banks, and some friendly and lazy journalists, were quick to dismiss the whole issue as a "paperwork problem." If "robo-signing" is a "paperwork problem," then the St. Valentine's Day Massacre was a "misplaced bullet problem."

"Robo-signing" alone is an enormous cloud of alleged criminality hanging over this country's banks. If you throw in all the well-documented instances of investor fraud, which have led to hundreds of millions in settlements, then our banks have committed a massive serial crime wave around mortgages.

But Monday's indictments weren't issued against a bank or a banker. They were issued against a home foreclosure processing company and its chief executive. That's today's news. Stay tuned.

Deal in Limbo

Meanwhile those settlement charges appear stalled, thanks to holdout Attorneys General from key states who refuse to give the banks blanket immunity. Another announcement deadline was missed on Monday, and the administration negotiators' subsequent announcement that "more than 40 states" have already signed on was just smoke and mirrors. More than 40 states signed on to a weaker agreement months ago, so the administration was hyping a non-event.

Tea-leaf readers have another busy day on Tuesday. New York Attorney General Eric Schneiderman is a pivotal player for several reasons. He was the first and most influential holdout Attorney General, he was named co-chair of the president's heretofore lackluster mortgage fraud task force, and he filed a lawsuit last week against several major banks for their use of the electronically-driven shell game of a pseudo-corporation known as MERS Inc.

On Tuesday Schneiderman announced, then canceled, a news conference. So we don't know what's going on with those settlement talks. Presumably Schneiderman's hanging tough on one of the critical issues involved, such as making sure that criminal and civil investigations can move forward after the deal is done.

But whatever's happening in Washington is no reason for state law enforcement officers not to do their jobs. In fact, it never has been.

Indicted

Missouri Attorney General Chris Koster knows that. Koster announced on Monday that a grand jury had issued an indictment which "alleges that mass-produced fraudulent signatures on notarized real estate documents constitutes forgery." Koster continued: "Today's indictment reflects our firm conviction that when you sign your name to a legal document, it matters."

As we said, DocX isn't a bank and Linda Green isn't a banker. But she's connected to quite a few of them. The servicing trail leads directly from DocX to many of the country's major banks, which benefited from its well-documented set of alleged abuses and false statements. Those banks include Citibank, Wells Fargo, HSBC, and JPMorgan Chase.

There's no evidence that any of these banks knew of DocX's behavior — yet. But the old prosecutorial question is Cui bono? Who benefits? Prosecutors will often indict a relatively small-time operator like Green in order to catch the "big fish." That may be why The New York Times report of Koster's statement included this observation:

"Mr. Koster said his office's investigation was continuing. This suggests he may hope to persuade Ms. Brown to cooperate in his investigation of the parent company."

The parent company is Lender Processing Services of Jacksonville, FL. But one would hope that Mr. Koster and his associates are willing to follow the money trail to its conclusion, if the evidence warrants.

Will prosecutors try to flip Linda Greene's superiors at Lender Processing so that they'll testify against bank executives? They should be prepared to do that, if necessary. So, while we're pleased about the indictment, we won't be quite as pleased as Yves Smith and other observers are until we know that prosecutors are also reviewing the banks who appear to have done the same things that DocX is accused of doing.

Big Fish

Hardworking journalists and courageous whistleblowers have provided a lot of information about Linda Greene and DocX, so it's no surprise that investigators found what lawyers call "reasonable suspicion" and asked a grand jury for indictments. There are other compelling "robo-signing" stories out there that are worthy of attention, too, and which also may provide grounds for reasonable suspicion.

Some of those stories are about the banks themselves. For "robosigning" and foreclosure fraud, there are credible whistleblower reports of abuses at several major banks, including those "Burger King kids" at JPMorgan Chase.

Pre-2008 abuses provide another rich vein for possible indictments. Michael Hudson's excellent investigative journalism indicates that GE Capital purchased a notoriously shifty mortgage company, then punished employees who raised alarms about widespread and continued fraud.

And while Countrywide is widely seen as the horror story of the mortgage scandal, federal investigators say that Bank of America, which purchased Countrywide and blames its woes on its subsidiary, was actually worse.

A Federal lawsuit says that "BOA was one of the most aggressive competitors in the mortgage-origination market" and accuses the bank of deliberately defrauding investors in its mortgage-backed securities.

Investor fraud is another rich vein for prosecutors to pursue against banks. So is securities fraud. Reports of abuse at any and all of these banks should be aggressively pursued.

What next?

A finding of reasonable suspicion or an indictment against any bank could embarrass the administration. Action against GE Capital could provide particular embarrassment for the president, since he chose GE CEO Jeffrey Immelt to head up his Jobs Council.

But a passing embarrassment is less painful than losing an election because you're perceived as indifferent to bank crime, or worse. And another cushy settlement with banks, where they would pay a pittance (in other people's money) in return for immunity from prosecution, would be the most embarrassing outcome of all.

Besides, it's not the president's decision to make. The responsibility lies with the Attorney General of every state, and with other prosecutors who have seen evidence of crime in their jurisdictions.

Missouri's announcement was a big deal. It shouldn't be big news that a prosecutor asked for indictments after being presented with evidence of a crime in his jurisdiction. It should be news when prosecutors don't pursue evidence of a crime. But when it comes to the banks, an indictment is news.

The country is waiting to see if dedicated law enforcement officials make more news in the days and weeks to come.