Eric Schneiderman, the New York AG, is battling political pressure to settle an investigation into banks’ foreclosure practices, according to the New York Times.The settlement could cost JPMorgan, Bank of America, Citigroup, and Wells Fargo around $20 billion and would pay for loan modifications and possibly counseling for homeowners. It would help them stay in their homes.
Schneiderman is said to object to it because the deal could compromise investigations into practices on the securitization side.
Many in the Obama administration, the Justice Department and HUD, are pushing for the deal — aggressively.
Check out what the New York Times says happened at a memorial service when Schneiderman ran into an official in the NYFed.
[Someone who was at the memorial service last week for the late Hugh Carey, the former New York governor, said Mr. Schneiderman “became embroiled in a contentious conversation with Kathryn S. Wylde, a member of the board of the Federal Reserve Bank of New York.”]
“It is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street — love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.”
Wylde told the NYTimes that their conversation was “not unpleasant.”
One thing to remember is that the Obama administration has been trying to end foreclosure-gate with settlements since February. Another thing is that this might be Obama’s extending an olive branch to Wall Street.
The settlement would be expensive, but potentially great for banks, especially Bank of America, which could use a conclusion to any mortgage-related litigation. If the settlement(s) is halted, it could mean more legal liabilities.