Foreclosuregate Update: NY Attorney General removed from negotiation team

Posted by AzBlueMeanie:

The states Attorneys General are the first line of defense for "consumer protection." This is now being turned into an oxymoron. The immense financial and political power accumulated by the corrupt banksters of Wall Street has undermined our political and legal systems and made them our masters. New York Removed From Leadership Role in Bank Foreclosure Settlement Talks – Bloomberg:

New York Attorney General Eric Schneiderman was removed from a leadership role in negotiating a nationwide foreclosure settlement with U.S. banks because his office “actively worked to undermine” the effort, a state official said.

Schneiderman, who doesn’t want a settlement to bar further investigations of mortgage practices by individual states, was removed from the executive committee of state officials working on the deal, Iowa Attorney General Tom Miller said yesterday in a statement.

“New York has actively worked to undermine the very same multistate group that it had spent the previous nine months working very closely with,” said Miller, who is leading the state group. For a member of the executive committee, that “simply doesn’t make sense, is unprecedented and is unacceptable,” Miller said.

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Separately from the settlement talks, Schneiderman has asked a New York judge to reject Bank of America’s proposed $8.5 billion mortgage-bond settlement with investors, a deal he called unfair.

The attorney general accused Bank of New York Mellon Corp. (BK) of violating state law in its role as trustee for the mortgage- securitization trusts that are covered by the agreement, and he said he has potential claims against Bank of America.

The banksters of Wall Street have intimidated state and federal law enforcement into a settlement position that will allow them to pay pennies on the dollar for the trillions of dollars in fraudulent mortgage-backed securities they marketed, and grant them immunity from any further civil and criminal liability. This is justice denied. New York Attorney General Kicked Off Government Group Leading Foreclosure Probe:

[S]tate prosecutors and federal officials are pressing to complete a proposed settlement with the five companies even though they've initiated only a limited investigation that hasn't examined the full extent of the alleged wrongdoing, The Huffington Post reported last month. Elizabeth Warren, who until recently was a senior adviser to President Barack Obama and Treasury Secretary Timothy Geithner, told a congressional panel last month that government agencies may not have sufficiently investigated claims that borrowers' homes were illegally seized.

Schneiderman, a Democrat who's in his first term as New York's top law enforcer, has been among a group of state legal officers who has also questioned the desire for a speedy resolution. He's leading his own investigation into mortgage improprieties, subpoenaing documents from the nation's largest financial institutions and reviewing court records for possible illegal home repossessions.

The Obama administration officials — in particular, Treasury Secretary Timothy Geithner and HUD Secretary Shaun Donovan — have publicly stated on numerous occasions that they want a quick resolution to the 50-state mortgage probe.

Sources said attorneys general like Schneiderman, along with the top legal officers from Massachusetts, Delaware and Nevada, among others, were complicating that goal by questioning the plan to scuttle the state and federal investigations in exchange for a settlement.

These attorneys general have said they're reluctant to sign on to an agreement that effectively kills their ongoing investigations or prevents new ones from being launched. Beau Biden, Delaware's top law enforcer, remains on the states' executive committee.

In a statement of support for Schneiderman, Beau Biden said that the "events leading up to the mortgage crisis must be fully investigated, including origination and securitization practices, before any broad immunity is granted."

"The American people deserve an investigation," he added.

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The state and federal discussions with the targeted banks — JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Ally Financial — center on the banks providing distressed homeowners with reduced monthly payments, lower mortgage principal amounts or other relief in exchange for a release from liability for past illegal actions. An agreement could yield up to $30 billion to be used to allow troubled borrowers to remain in their homes or to help others move into rentals, according to people involved in the talks and documents reviewed by HuffPost.

The bigger the effective grant of immunity from potential government civil lawsuits, the more cash the companies are willing to pay to settle the accusations, these people have said.

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Schneiderman's removal will likely make it easier for state and federal officials to reach an accord with the five banks. However, the potential amount of money they'll be able to extract will likely decrease.

Schneiderman, armed with New York state's Martin Act, can bring suit against alleged fraudsters without having to prove that they intended to commit fraud, a much more lenient standard than available to federal securities regulators. New York's top legal officer is investigating whether banks followed the state's laws when bundling mortgages into securities.

That probe could prove explosive.

"If mortgages were not properly transferred in the securitization process, then mortgage-backed securities would in fact not be backed by any mortgages whatsoever," Adam J. Levitin, a bankruptcy expert and professor at Georgetown University Law Center, told a congressional panel last November. Levitin said the problem could "cloud title to nearly every property in the United States" and could lead to trillions of dollars in losses.

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With a settlement into those investigations seemingly off the table, the banks would likely be willing to pay less in penalties.

New York Attorney General Eric Schneiderman and those Attorneys General willing to stand steadfast with him in the face of opposition from the White House and the Federal Reserve Board to pursue justice against the corrupt banksters of Wall Street are real American heroes. They are to be applauded and supported by the American people who still believe in the rule of law and demand justice. "somebody's going to emergency, somebody's going to jail." No settlement — "I'll see you in court."