As much as Morgenson’s expose was key, the editorial page of the New York Times throwing its weight behind Schneiderman gives him real political cover. From “It’s a Flawed Settlement”
The Obama administration has turned up the heat on Eric Schneiderman, New York’s attorney general, to go along with a proposed settlement with the nation’s largest banks over dubious foreclosure practices. Mr. Schneiderman should stand his ground in not supporting the deal. The administration says that a settlement would quickly deliver much needed relief to hard-pressed borrowers, but it’s doubtful it would provide redress on a par with the banks’ wrongdoing or borrowers’ needs…
Mr. Schneiderman, who became the attorney general of New York after the scandal broke, has rightly refused to go along with a settlement that is not based on a thorough investigation, and has ordered investigations of his own. He has been supported by a handful of other state prosecutors, who say that the proposed deal would restrict their own investigations and prosecutions.
I do quibble with one part of the op-ed:
Shaun Donovan, the secretary of Housing and Urban Development, however, says that a settlement on the narrow issue of robo-signing would not preclude other investigations by individual attorneys general. But, clearly, once the robo-signing issue is off the table, investigators would lose leverage to pursue remedies for other possible illegalities in the packaging, marketing and transferring of mortgage securities.
This isn’t correct. Robo signing isn’t worth a lot liability-wise nor does it give much (any) leverage into other theories of action. The real issue is much simpler. The banks are not going to agree to a deal that includes only robosigning. The only reason for them to come to the table and pay any kind of damages is to get a broader release. We’ve said so from the get-go. And the Administration has spent so many cycles on the settlement that it perceives that it has its credibility at stake on getting a deal, no matter how bank friendly it is. (Actually, bank friendly is the point, it just can’t be blatantly bank friendly).
Mirabile Dictu! New York Times Tells Obama Administration Off, Backs Schneiderman on Mortgage Settlement « naked capitalism Make big money in penny stocks today