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New York Congressional Dems Support Schneiderman on Foreclosure Fraud Investigation

Eric Schneiderman by azipaybarah

Eric Schneiderman keeps picking up support in his quest to hold a real investigation on the criminal failures in mortgage securitization and servicing. He has the support of a number of newspaper editorial boards, including the St. Louis Post-Dispatch, which devoted its Sunday editorial to an out-of-state Attorney General:

Eric Schneiderman won’t play ball with efforts to make the mortgage foreclosure mess go away. In the spring, federal regulators thought they had a deal with Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, the five biggest mortgage servicers, to settle claims that they had taken shortcuts by foreclosing on homes before the paperwork was properly processed. The banks would have paid about $20 billion, most of it for loan modifications and counseling.

But the banks wanted the 50 state attorneys general to sign off on the deal, too. The AGs have been meeting for months and were said to be close to an agreement. But Mr. Schneiderman is an outlier.

Good for him. The banks want this so-called “global agreement” to indemnify them against any mortgage-related claims, not just processing complaints. Mr. Schneiderman has been investigating the way that the banks securitized mortgages in the years leading up to the 2007-2008 housing collapse, cutting them into pieces and bundling them as mortgage-backed bonds.

If a random editorial board in St. Louis can get this exercised about Schneiderman’s work, you know his position has appeal. And the editorial showed a keen understanding of the issue.

CommunityThe Bullpen

New York Congressional Dems Support Schneiderman on Foreclosure Fraud Investigation

Eric Schneiderman keeps picking up support in his quest to hold a real investigation on the criminal failures in mortgage securitization and servicing. He has the support of a number of newspaper editorial boards, including the St. Louis Post-Dispatch, which devoted its Sunday editorial to an out-of-state Attorney General:

Eric Schneiderman won’t play ball with efforts to make the mortgage foreclosure mess go away. In the spring, federal regulators thought they had a deal with Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, the five biggest mortgage servicers, to settle claims that they had taken shortcuts by foreclosing on homes before the paperwork was properly processed. The banks would have paid about $20 billion, most of it for loan modifications and counseling.

But the banks wanted the 50 state attorneys general to sign off on the deal, too. The AGs have been meeting for months and were said to be close to an agreement. But Mr. Schneiderman is an outlier.

Good for him. The banks want this so-called “global agreement” to indemnify them against any mortgage-related claims, not just processing complaints. Mr. Schneiderman has been investigating the way that the banks securitized mortgages in the years leading up to the 2007-2008 housing collapse, cutting them into pieces and bundling them as mortgage-backed bonds.

If a random editorial board in St. Louis can get this exercised about Schneiderman’s work, you know his position has appeal. And the editorial showed a keen understanding of the issue.

Today, 20 Democrats in the New York Congressional delegation, including New Democratic Coalition leader Joseph Crowley, upstate moderates like Kathy Hochul and Bill Owens and DCCC chair Steve Israel, backed up Schneiderman and criticized Iowa AG Tom Miller for kicking Schneiderman off the executive committee negotiating with the banks. Led by Rep. Jerrold Nadler, their letter is targeted to Miller and parochial in nature, but adding their weight to Schneiderman’s concerns is important. I’ve posted the whole thing on the flip, but here’s an excerpt:

Raising legitimate concerns about elements of the proposed settlement is a responsibility of every member of the executive committee and should never be the basis for silencing a viewpoint. Your removal of Attorney General Schneiderman sets a dangerous precedent for other attorneys general who, out of fear of what might happen, may choose silence over voicing valid concerns with particular aspects of the proposed settlement. Moreover, your attempt to banish opposition rather than address varying viewpoints undermines both the validity of the process and any settlement reached by the committee.

The rumor is that the Obama Administration and the remaining AGs leading the negotiations really want a settlement by Labor Day. Perhaps they want it as a point in Obama’s jobs speech, to show movement on all fronts. Perhaps they want it before quarterly earnings reports have to be calculated. But if they think they can get a settlement without New York’s involvement, they’re wrong. And with this support behind him, Schneiderman is likely to remain strong. He would anyway, because he thinks it’s the right thing to do.

Here’s the full letter from the New York Congressional Dem delegation:

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David Dayen

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