Schneiderman
ALBANY, N.Y. (Legal Newsline) - New York Attorney General Eric Schneiderman, one of the 49 state attorneys general who agreed to a deal with the nation's five largest banks last week, says he's not stopping there.
In a statement Friday, the attorney general said the multistate settlement fulfilled his demand that he retain a right to bring legal action over misconduct that hasn't yet been investigated -- a right that was absent from previously proposed settlements.
However, he said he will continue to investigate the mortgage industry.
"Thanks to the advocacy and support of Americans across the country, we have preserved the right to continue investigating the misconduct that led to the bubble and crash of the housing market," Schneiderman said.
"For a year, the proposed settlement was simply inadequate, and I applaud all those who fought with us to hold banks accountable for their role in the foreclosure crisis, provide meaningful relief to struggling homeowners, and allow a full airing of the facts to ensure that abuses of this scale never happen again.
"On multiple fronts, we will continue to investigate the mortgage crisis and ensure that justice and accountability prevail."
The probe, which began in October 2010 with inquiries into so-called "robosigning" practices, broadened into identifying and addressing additional alleged improper foreclosure practices.
Finally, after months of negotiations, federal officials and the attorneys general announced Thursday that a $25 billion agreement was reached between them and the five banks -- Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc., Ally Financial Inc. and Bank of America Corp.
The settlement is one of the largest civil settlements ever obtained by the nation's attorneys general -- second only to their 1998 settlement with the tobacco companies.
The multistate deal, which only covers those mortgages held by the five banks, institutes new protections for homeowners and nationwide reforms to mortgage servicing standards.
It also still leaves the door open for legal remedies for mortgage-related misconduct -- something Schneiderman and a handful of other attorneys general were adamant about.
The New York attorney general said until recently language in settlement proposals were "too broad" to justify reaching an agreement.
He called the current settlement, of which New York's estimated share is $136 million, a "vast improvement."
Schneiderman also noted that the settlement preserves the legal authority of a new national mortgage crisis unit, of which he is a co-chair.
Last month, President Barack Obama announced the creation of the unit during his State of the Union address.
"Tonight, I'm asking my Attorney General to create a special unit of federal prosecutors and leading state attorney general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis," Obama said in his address.
"This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans."
The Residential Mortgage-Backed Securities Working Group will operate as part of the government's Financial Fraud Enforcement Task Force.
The working group brings together federal, state and local agencies, including the U.S. Department of Housing and Urban Development, FBI, IRS, the Consumer Financial Protection Bureau, the Financial Crimes Enforcement Network and the Federal Housing Finance Agency Office of Inspector General.
Schneiderman has said the idea behind the working group is to focus on the actions that created the crisis, not the abuses that came later.
One New York lawmaker says it was Schneiderman and California Attorney General Kamala Harris' disapproval of earlier proposed deals that probably ended up making the current one better.
Richard Brodsky, a former assemblyman and who ran unsuccessfully against Schneiderman in the Democratic primary in 2010, told The Associated Press there was some value to what they both did.
"I think when California and New York said no, it put some spine in the whole process and they got a better deal," he told the AP.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.