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New York Attorney General Eric Schneiderman was kicked off the 13-person executive committee for negotiating a nationwide foreclosure settlement with U.S. banks, Bloomberg reported.Iowa Attorney General Tom Miller said in a statement yesterday that Schneiderman’s office had “actively worked to undermine” the effort.
“New York has actively worked to undermine the very same multistate group that it had spent the previous nine months working very closely with,” said Miller, who is leading the state group. For a member of the executive committee, that “simply doesn’t make sense, is unprecedented and is unacceptable,” Miller said.
Here’s one example how he may have been “undermining” the effort.
A few days ago Schneiderman reportedly had a heated conversation at a memorial service with Kathryn Wylde, a member of the board of the Federal Reserve Bank of New York, over the foreclosure settlement deal.
A settlement with JPMorgan, Bank of America, Citigroup, Wells Fargo and Ally Financial could cost the banks around $20 billion in penalties and would pay for loan modifications and possibly counseling for homeowners. It would also help them stay in their homes.
Schneiderman is said to object the deal because it could compromise investigations into the practices on the securitization side.
Over the past year, Attorneys General from all 50 states have been investigating bank foreclosure practices and working to reach a settlement with the banks. Many in the Obama administration, the Justice Department and HUD have been pushing aggressively for a deal to be reached.
The New York AG has been vocal against barring further investigations by states as part of the settlement with the banks.
He’s not alone in that camp.
Schneiderman including Delaware’s Beau Biden, Nevada’s Catherine Cortez Masto and Massachusetts’s Martha Coakley are among those Attorneys General who want to continue their own probes after an agreement.
“Ongoing investigations by attorneys general cannot be shut down by efforts to settle quickly and those responsible must be held accountable,” a spokesperson for Schneiderman said.
What’s more is booting him from the panel doesn’t look like it’s going to keep him quiet either.
“While it is Attorney General Miller’s prerogative to remove us from the executive committee, we will continue to be an active voice on these issues as a part of the 50-state coalition and in other forums,” his spokesman said.
UPDATE: Since learning of this new development, Rolling Stone reporter Matt Taibii has become inflamed by the arrangement, calling it, “Obama goes all out for a dirty banker deal.” He’s exaggerating referring to the Obama’s administration’s influence in trying to get Schneiderman to side with everyone else who’s in favour of a settlement. Here it is:
[The Obama administration, all the banks, and, now, apparently, all the other state attorneys general] cooked up a deal that would allow the banks to walk away with just a seriously discounted fine from a generation of fraud that led to millions of people losing their homes.
The idea behind this federally-guided “settlement” is to concentrate and centralize all the legal exposure accrued by this generation of grotesque banker corruption in one place, put one single price tag on it that everyone can live with, and then stuff the details into a titanium canister before shooting it into deep space.
This deal is all about protecting the banks from future enforcement actions on both the civil and criminal sides. The plan is to provide year-after-year, repeat-offending banks like Bank of America with some stability and certainty, so that they know exactly how much they’ll have to pay in fines (trust me, it will end up being a tiny fraction of what they made off the fraudulent practices) and will also get to know for sure that there are no more criminal investigations in the pipeline…
The banks are going to claim that all they’re guilty of is bad paperwork. But while the banks are indeed being investigated for mass tax evasion (by failing to pay fees associated with mortgage registrations deed transfers) and mass perjury (a la the “robo-signing” practices), their real crime, the one Schneiderman is interested in, is even more serious.