Here's where it gets a bit messy. Forty or so state attorneys general have negotiated this settlement proposal with notable dissent from California, New York and other states. New York Attorney General Eric Schneiderman had become a focus for anti-settlement progressives who agreed that broader investigations, and possible fraud prosecutions, were warranted:
Iowa Attorney General Tom Miller, the top state official leading the negotiations, removed Schneiderman from the coalition's executive committee last summer, saying he had "actively worked to undermine" the efforts to reach a settlement. The move backfired, with some lawmakers, editorial boards and liberal activists rallying behind Schneiderman and praising his skepticism of the talks and his push for more in-depth inquiries.
Brady Dennis - Proposed settlement with banks over foreclosure practices dealt a setback Washington Post 8 Feb 12
Schneiderman has been unequivocal in his objections:
"It's sort of like being in criminal case and having someone say, 'OK, you've got me on this gun charge. I'll plead guilty, but I need you to give me a release from anything else I might have done, before you look into anything else I might have done," Schneiderman said on WNYC last month. "You don't do that."
Loren Berlin - Eric Schneiderman Sues BofA, Wells Fargo, JPMorgan Chase Over Electronic Mortgage Fraud Huffington Post 3 Feb 12
While the settlement deal remains somewhat flexible the negotiating attorneys general and the banks have been increasingly pressing for agreement, threatening to exclude recalcitrant states from a pro-rata settlement. Then in January Obama made a significant announcement during the SOTU speech:
WASHINGTON -- During his State of the Union address tonight, President Obama will announce the creation of a special unit to investigate misconduct and illegalities that contributed to both the financial collapse and the mortgage crisis.
The office, part of a new Unit on Mortgage Origination and Securitization Abuses, will be chaired by Eric Schneiderman, the New York attorney general, according to a White House official.
Schneiderman is an increasingly beloved figure among progressives for his criticism of a proposed settlement between the 50 state attorneys general and the five largest banks.
Sam Stein - EXCLUSIVE: Obama To Announce Mortgage Crisis Unit Chaired By New York Attorney General Schneiderman Huffington Post 22 Jan 12
This was followed shortly thereafter by a new suit from the New York Attorney General's office:
Three big banks were hit on Friday with yet another lawsuit related to wrongful foreclosures. Democratic New York Attorney General Eric Schneiderman filed suit against Bank of America, JP Morgan Chase and Wells Fargo for deceptive and fraudulent use of a private database used to register mortgages, according to a Friday press release from his office.
Loren Berlin - Eric Schneiderman Sues BofA, Wells Fargo, JPMorgan Chase Over Electronic Mortgage Fraud Huffington Post 3 Feb 12
One interpretation of this is that Schneiderman and the negotiating attorneys general had some convergence on an agreement, on the assumption that New York wouldn't deal themselves out of the proposed settlement:
"If the deal terms had been decided six months ago, a state couldn't have pursued this kind of lawsuit," said the source. "The fact that Schneiderman has filed this case suggests that the terms of the deal have changed since then."
Loren Berlin - Eric Schneiderman Sues BofA, Wells Fargo, JPMorgan Chase Over Electronic Mortgage Fraud Huffington Post 3 Feb 12
On the other hand there has been an interesting hiccup today which may bear watching closely:
New York Attorney General Eric Schneiderman abruptly called off a news conference at which he could have provided a crucial endorsement of a proposed settlement with some of the nation's biggest banks over shoddy foreclosure practices.
Schneiderman's unexplained last-minute postponement cast another cloud of uncertainty over the ongoing negotiations, which have dragged on for more than 16 months. State and federal officials have been intent on finalizing the deal by the end of the week.
Brady Dennis - Proposed settlement with banks over foreclosure practices dealt a setback Washington Post 8 Feb 12
So, what gives? It seems pretty clear that the Obama administration is trying to stake out some sympathetic territory here for the upcoming election:
The lack of a pursuit of pre-crisis "crimes" remains a big, public frustration. We have no idea if this will go anywhere, but obviously this shows that The White House is still aware of this issue, and also shows that it likely wants to put Wall Street on trial (figuratively and perhaps literally) in the runup to the election.
Joe Weisenthal - Obama Is Announcing A Brand New Group To Go After Fraud That Caused The Financial Crisis Business Insider 24 Jan 12
Given Attorney General Schneiderman's new role and the importance of holdouts California and New York on this settlement, not to mention the apparent "urgency" surrounding closing this deal, it will be interesting to see what developments arise in coming days and weeks. Robo-signing, while clearly criminal, is merely the tip of the potential fraud iceberg. Well worth watching.
y the time the robo-signing scandal had spread across all fifty states their attorneys general started looking for a coordinated and comprehensive settlement with the banks:
