New York and Delaware have agreed to work together to pursue a wider-ranging probe into Wall Street's role in the mortgage meltdown. California Atty. Gen. Kamala D. Harris is also considering joining that effort, and has said publicly she is interested in pursuing investigations that involve the packaging, securitizing and selling of risky mortgages. Massachusetts Atty. Gen. Martha Coakley has also said she is interested in pursuing separate investigations into mortgage-securitization practices.
Those probes are unlikely to move forward if the 50-state talks result in broad legal immunity for mortgage servicers. The five largest institutions involved - Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. - are pushing the states' attorneys for broad release.
"We continue to believe that the best way to get the housing market going again in every state is a global settlement that addresses these issues fairly, comprehensively and with finality," BofA spokesman Lawrence Grayson said Monday. The other four financial institutions declined to comment.
As the talks have stalled, the Obama administration has waged a campaign to pressure New York Atty. Gen. Eric Schneiderman, leaning on his supporters to urge him to back a broad deal that would grant immunity to the nation's five largest mortgage servicers, a person familiar with the discussions said. But Schneiderman has remained resolute that his own investigations must be allowed to go forward.
"The attorney general remains concerned by any settlement agreement that would fail to provide homeowners meaningful relief to stay in their homes, allow the housing market to begin to recover and get our economy moving again," said Danny Kanner, a spokesman for Schneiderman. "While our federal and state counterparts may be working toward the same goals, ongoing investigations by attorneys general cannot be shut down by efforts to settle quickly and those responsible must be held accountable."
New York and Delaware have more than a dozen attorneys working full time on their effort. They have subpoenaed or requested information from 13 financial firms, including Goldman Sachs Group Inc. and JPMorgan Chase. Harris would be a key addition to the investigation because California was the location of a vast number of the mortgages and foreclosures that fed into the crisis. She met with Schneiderman in San Francisco last month to discuss participating in the probe.
The sense seems to be that if the banks and their DC enablers can get 40 or so state AGs to sign on, they'll likely cut a deal, a crappy deal to be sure. But as long as there are AGs out there (and here, thankfully) that still take their duty to protect and represent the public's interest before those of the people who got us in this mess in the first place, there is still some hope that such a deal can be greatly improved.
Good on Schneiderman, Biden, Smith and the rest for not rolling over for the big money folks in Lower Manhattan and their lapdogs in DC.
