Schneiderman Removed From Mortgage Abuse Panel
ROBERT SIEGEL, host: Eric Schneiderman was fired this week. Not from his day job, he's still the Attorney General of New York State, but he's no longer on the executive committee of state attorneys general who are negotiating a settlement with banks over fraudulent mortgage foreclosure practices. According to news reports, the consensus position among the state AGs is to get a narrow settlement, mostly on robo-signings, and to get it done. Attorney General Schneiderman, who is a first term Democrat, said this in a statement.
"Our ongoing investigation into the housing crisis cannot be shut down to accommodate efforts to settle and give banks and others broad immunity from further legal actions." Immunity seems to be what this dispute is about. Wall Street Journal reporter Ruth Simon has been covering the story and joins us now from her office in New York City. Welcome to the program.
RUTH SIMON: Thank you.
SIEGEL: Tom Miller, the attorney general of Iowa, who I guess chairs this whole project of the state attorneys general, says that Mr. Schneiderman, the New York attorney general, has been undermining the 50 states in their attempts to negotiate a settlement. What's going on here? What's the dispute?
SIMON: Yeah, I think often these multi-state negotiations are difficult. And what's unusual here is that the disagreements are coming to the fore and that they've been made very public even before we've got a deal. In this case, Mr. Schneiderman wants to take a broader approach, to look at both consumer and investor claims. He's apparently asked administration officials to give him more time to look at matters related to securitization and the folks negotiating the deal want to focus this part of their effort on robo-signing and the problems in how troubled mortgages were handled.
SIEGEL: By securitization, you mean, the New York State attorney general wants to look into mortgage-backed securities and how..
SIEGEL: ...in his - in the words of his statement, the misconduct that lead to the collapse of America's housing market.
SIMON: And what he has that a lot of other states don't is a powerful tool called the Barton Act to look at alleged misconduct by Wall Street.
SIEGEL: So, Schneiderman, the New York State attorney general, says one thing he doesn't want to do is to give the banks broad immunity to other state lawsuits that might be brought against them. And the other attorney generals, where do they stand on that, do you know?
SIMON: What we know is the banks have asked for broad immunity, but I've been told that they're not going to get it, that what's happened is the government has come back with a narrower legal release that the officials who were negotiating that have said would allow Mr. Schneiderman or other parties to pursue things like mortgage securitization or fair lending claims. Of course, the devils are in the details and there is no final agreement. And Mr. Schneiderman, of course, if he doesn't sign the agreement, isn't bound by it, either.
SIEGEL: And so far as you know, what the banks want is if they're gonna pay 25 billion, they want to know that's the end of litigation over mortgages?
SIMON: The banks would like to put it all behind them, clearly. I think it's painful to have to keep dealing with this. I think you also have to keep in mind that in any kind of negotiation, the party that's under investigation always is seeking the broadest legal protection possible. And the folks on the other side of the table want to preserve their ability to bring any kind of additional cases or ongoing cases for other types of wrongdoing. What normally happens, you don't know about the back and forth of these negotiations until they're all done.
Here, because this has been such a public process, a lot of this has been going on in the public eye.
SIEGEL: The discord between New York State Attorney General Larry Schneiderman and the panel or Attorney General Miller of Iowa, that's gone public. Does that mean that all the other attorney generals are with Mr. Miller or - I've heard that Massachusetts or Delaware might indeed sympathize more with the position Mr. Schneiderman's taken?
SIMON: I think that there are other attorney generals besides Mr. Schneiderman who have concerns about the language of a release. Where they will come out in the end will probably depend on what the final document looks like. There were also, earlier in the discussions, a group of AGs who thought that the AGs were asking for too much.
SIEGEL: Well, Ruth Simon, thanks for talking with us.
SIMON: My pleasure.
SIEGEL: That's Wall Street Journal reporter Ruth Simon speaking to us from New York.
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