Now that the big settlement talks with the banks are over, and most of the reporters have gone home, not very many people are paying attention to what is going on in the financial fraud task force, or in the continuing conversations between various players on Wall Street and the government. But not understood by most people is that there may be a Round 2 in the settlement talks, and if there is, it may well be a doozy -- a much bigger deal than the first round. If there isn’t a Round 2, that will likely be a different kind of “doozy,” a problem with huge political and economic implications for the President and politicians of all stripes.

Let’s start with talking about why so many activists and organizations like the Campaign for a Fair Settlement and the New Bottom Line pushed so hard for a more aggressive investigation in the first place. No matter how those first settlement talks with the banks turned out, it was always clear that whatever the number government negotiators got would be tiny compared to the scope of the $700 billion dollar underwater mortgage problem homeowners and our entire economy is faced with. And we were right: the $25 billion is a drop in the bucket, about 3 percent of the way to a solution. The far bigger question is what would happen next, because our national economy will continue to be weighed down heavily by this deeply damaged housing market unless there are much deeper mortgage write-downs.

There are two big ways for more mortgage write-downs to happen, and two big goals progressives should have for the financial fraud task force. The former pair first: most mortgages are owned by either Fannie and Freddie, or by the big bank conglomerates on Wall Street. The first way for massive mortgage write-downs to happen is either for Fannie and Freddie acting administrator Ed DeMarco to change his policies on write-downs, or for him to be replaced by Obama making a recess appointment of someone who would change the policies. That’s why many groups have launched a Fire DeMarco campaign, and many others keep banging on his door to ask him to change direction. There is some dissent on this among people who know the banking issue, because some banks own second liens on these mortgages and could benefit as a result. It’s a fair point, and anything that can be done to structure Fannie and Freddie write-downs in a way to not help the big banks is important to do. But my view is that maximizing the write-downs is critical, that homeowners and the overall economy need these write-downs too badly to spend an inordinate time worrying that some banks may benefit as a result. (Wall Street bankers find many different ways to hedge their bets and diversify their holdings, meaning they sometimes find ways to profit even on things that are actually good for people. Go figure.)

The other way for big write-downs to happen is if the financial fraud task force can squeeze the big banks on all the fraud they have committed, and get them to agree to writing down a much bigger pot of money -- in the hundreds of billions, not the tens -- in exchange for a legal release on some fraud claims (although definitely not all) by the government. Which leads to my next major point: that of goals for this fraud task force.

The two goals for the task force as far as the progressives I am talking to are these: write-down money and prosecution for crimes committed. Some people think these are mutually exclusive. I don’t, and neither should task force members. Based on what we already know from news reports and other legal action, it is clear that if the task force is aggressive and tough enough in their negotiations, they can through subpoenas and depositions find thousands of separate violations of punishable financial fraud. Much of that can be used to force the bankers to the table for real negotiations about hundreds of billions of dollars in mortgage write-downs, but investigators will also find plenty of fraud so egregious that the high rollers in these firms ought to be going to jail as well. Indicting, perp walking, and sending some of these top execs to prison is important, because if wealthy and powerful people can continually violate the law with impunity, they will in fact keep doing just that, and our financial system will be permanently at risk.

The question now is whether the task force will be effective in bringing bankers to justice, and in forcing bigger write-downs. But this is a real question, and I think it is important for the American people to understand what is going on in there. To all of us on the outside who have been working on these issues, things don’t seem to be moving very fast. We need to know the answers to some very important questions, including:

-Is there an executive director, coordinator, or clear manager of any kind in place to drive this process forward aggressively? There was discussion for a while of Rep. Brad Miller (D-N.C.), a great consumer advocate, playing such a role, but that talk seems to have died out and I am still not clear how they are managing this in the meantime.

-Will any more staff resources beyond the very modest numbers announced when the task force was unveiled be appointed?

-Of the staff resources that were appointed, are all of them actually assigned and working? If not, how many are actually doing any work? If not, why (the hell) not?

-Are task force leaders keeping a close eye on statute of limitation issues to make sure we can actually prosecute the most important cases of bank fraud that exist out there?

-After the first flurry of subpoenas, we haven’t to my knowledge seen any more come down. Why not? Seems like there is plenty to investigate, why the hold-up on more subpoenas?

-At least some of the members of the task force have said they want to be aggressive and fast moving in this investigation. Are there people putting road blocks up? If so, why aren’t they being cleared away? Who has point responsibility for clearing the road blocks out of the way?

Here’s the most important question in my mind: is the White House paying enough attention to this? I know from my experience in the Clinton White House that once a decision is made to move forward on a major new initiative like the settlement and fraud task force, that sometimes the sense of urgency fades and senior staff tend to move on to new issues, problems, and crises -- they assume whoever they appointed to do things is taking care of it. That is natural enough given all the demands on the White House, and I sense it may have happened here. But I fear for my friends in the Obama White House that this is going to come back and bite them in the ass in a really serious way if they aren’t paying a lot of attention to it. One of the greatest weaknesses the President has going into election season, both with swing and base voters, is the lingering feeling that he and his team have been too soft on the Wall Street guys that took down this economy. The big banks making record profits and handing out record bonuses the year after taxpayers bailed them out, and while the overall economy has been terrible, has left a lasting impression with voters. The failures of the HAMP program, the flurry of bad press around the Suskind book, the unwillingness to recess appoint Elizabeth Warren as the head of Consumer Financial Protection Bureau (even though the person Obama appointed, Rich Cordray, has been terrific, he has nowhere near the profile or cachet with activists following the issue as Warren), and the lack of any prosecution of Wall Street big shots has steadily added to that image. So if nothing happens with this task force any time soon, it will be a huge disappointment and a very big deal to people and organizations working on the issue, to the reporters who know the financial beat, and to voters in general. In an election season dominated by discussion of Mitt Romney’s Wall Street background, for the President to be vulnerable on this issue would be a terrible mistake, and the way they get strong on it is to have a successful task force.

Here’s the electoral component of this that almost no one is thinking about: there are 11,000,000 underwater homeowners right now, many of them families with multiple voters living there. There are a ton of them in key swing states like Nevada, Florida, Ohio, Pennsylvania, North Carolina, Wisconsin, and Colorado. In my mind, they are very likely to be swing voters: screwed over by Wall Street, but not feeling like either party is helping them much. They have heard about the settlement, but $25 million doesn’t go very far when there’s $700 million in negative equity, so they aren’t likely to get much help, which will make them even more irritable -- it could be HAMP all over again in terms of promises of help made but not delivered. Holding the banks accountable, and delivering a big new round of write-downs, is going to look awfully good to those voters and their neighbors who don’t want more foreclosed homes on the block.

My advice to my friends at the White House is to pay a lot of attention to this sooner rather than later, and to light a fire under anyone involved in the task force who may be throwing those road blocks up.

The task force needs to show some visible progress, some real movement that is obvious to people, sooner rather than later on this. If they move aggressively forward, I believe based on conversations with legal experts that it is entirely possible the banks can be forced to write down $200-300 billion in mortgages before the end of the year. That would not only help those underwater homeowners but would be a dramatic boost to the entire rest of the economy because of the extra cash it would put in homeowners’ pockets and the major boost it would be to the overall housing market. The big banks can certainly afford it: according to an SEIU report, in 2010 alone just the six biggest banks gave out an estimated $143 billion in bonuses. Given that these write-downs would be cumulative over many years, $200-300 billion might mean smaller bonus checks and profit margins, but it is nothing that would break the bank. And here’s the other thing: if you write down these mortgages and stabilize the housing market, all those toxic assets the big banks hold will start to look healthier soon, so the banks would even get some of that money back.

This issue has faded from the headlines, but it is a huge deal -- for the homeowners who remain stuck underwater, for the housing market and economy as a whole, and for the President’s re-election chances. Let’s hope these questions get answered soon, and in a good way. And let’s hope the task force can get its act together to force another big settlement, and some perp walks as well, before it is through.