On Wednesday, President Barack Obama tapped Schneiderman to co-chair a joint federal-state task force to pursue criminal charges related to abusive mortgages and the bundling of those loans into investments. Some observers suggested the appointment was intended to blunt Schneiderman’s opposition to the multistate settlement. Schneiderman has said he's not about to let bankers off the hook.
"My concern ... has always been to make sure that we're not releasing claims that obviously now are even more important to me because I'm investigating them," he told reporters Wednesday.
From the beginning of the settlement talks, the five big banks have been holding out for a blanket waiver of legal liability to protect them from future lawsuits or prosecution. The creation of Schneiderman’s task force makes that blanket waiver extremely unlikely. It may even collapse the deal, JP Morgan Chase Chief Executive Officer Jamie Dimon, told CNBC.
“My own read is (the creation of the new task force) has a pretty good chance of derailing it,” said Dimon.
The proposed settlement was also dealt a major blow Wednesday when California Attorney General Kamala D. Harris said its terms would limit her ability to bring civil charges against mortgage lenders that wrongfully foreclosed on homeowners.
"We've reviewed the details of the latest settlement proposal from the banks, and we believe it is inadequate for California," said Shum Preston, a spokesman for Harris
As ground zero for the mortgage meltdown, California is critical to the approval of any settlement. Roughly one in four of all foreclosures are happening in the state and ten of the top 20 metro areas with the highest foreclosure rates in 2011 are there according to RealtyTrac.
From the early stages of the talks, Schneiderman and a handful of other state AGs have resisted any deal that would let banks off the hook for a variety of claims by homeowners and investors who bought bonds backed by home mortgages. In August, Iowa Attorney General Tom Miller, who is leading the state group, booted Schneiderman from the executive committee of federal and state officials because he steadfastly opposed any deals that would end investigations into mortgage fraud.
Schneiderman holds several powerful legal cards that the other 49 AGs don’t. New York’s anti-fraud Martin Act gives him broad subpoena powers other state prosecutors lack. Some New York state securities laws apply to Wall Street firms based in the state. Many of the pools of mortgages that were chopped up into bonds are held in trusts registered in New York.
Maybe he actually means business and will hold the banks responsible. As of right now, Bank of America is being investigated as to how they handled my mortgage, so I don't believe this is out of the scope of things. I think many more mortgages will be scrutinized. It's just a long process and the wheels of justice do turn slowly.
edit on 26-1-2012 by Afterthought because: (no reason given)