More AGs drawing lines in the sand on bank settlement talks

Originally posted at AMERICAblog

Minnesota Attorney General Lori Swanson has written a very powerful letter to Iowa AG Tom Miller, NY AG Eric Schneiderman and an associate AG at the Department of Justice stating where she stands on the fifty forty-five state robosigning settlement talks with the nation’s five largest banks. In it, she calls for a settlement with “teeth”. She goes on:

[T]he banks should not be released from liability for conduct that has not been investigated and is not appropriately remedied in any settlement. For example, a settlement that focuses on mortgage servicing standards should not release the banks or their officers from liability for securities claims or conduct arising out of the securitization of mortgages or liability arising out of the use of the Mortgage Electronic Registry System (“MERS”), where those claims have not been investigated or fairly addressed through the settlement. In addition, I am sure we all agree that the banks and their officers cannot and should not be released from criminal liability in any civil settlement

This is strong stuff. Swanson also supports the FHFA lawsuit against the banks and calls on her colleagues not to do anything to impede it. She writes, “We should fully welcome and support all legitimate efforts to investigate the banks and to hold them accountable for their unlawful activity, which has been enormously destructive to this country and our citizens.”

Swanson joins Schneiderman, Catherine Cortez Masto of Nevada, Beau Biden of Delaware, and Martha Coakley of Massachusetts as AGs who have stood up for strong settlement demands and their right to investigate. Biden has recently come under criticism by Delaware’s Democratic Governor Jack Merkell, who wants Biden to back off the banks and not try to investigate them. Biden’s response, fortunately, is strong:

“My job is to protect homeowners, investors and all Delawareans affected by the abuses of the mortgage industry that created this economic crisis. I do not settle matters that have not been investigated, and there remains a lot of work to be done in understanding the scope of the mortgage industry’s bad conduct that has hurt so many. Our economy works the best when everyone plays by the rules, and we must hold those who brought our financial system to the brink of collapse to account.” [Emphasis added]

There’s clear momentum in the direction of holding banks accountable. As more attorneys general come out against a broad settlement on foreclosure and securitization fraud, the less likely any settlement becomes. Kudos to AGs Swanson and Biden for standing up to the banks and for their constituents.

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