President Barack Obama has proven willing to do something Gov. Andrew Cuomo has so far been reluctant to do: give Attorney General Eric Schneiderman more investigatory powers.
The president recently tapped the West Sider to co-chair a new joint mortgage fraud investigation unit, giving him access to more resources and more ground troops to go after fraud and abuse on Wall Street.
Schneiderman spoke to City & State about his new responsibilities, his predictions on a final settlement and his fluctuating relationship with Cuomo’s office.
City & State: Were you surprised by the president’s announcement?
Eric Schneiderman: We had been talking about the possibility for a joint collaboration for a long time, so I wasn’t surprised in that sense. I was pleased to be asked and honored to be asked, and [I’ve been] working very hard with my colleagues ever since.
C&S: Why now?
ES: From my point of view, when I took over as attorney general, I learned that there was a multistate investigation by a fairly large group of AGs, and that they were attempting to negotiate a settlement with a bunch of banks over abuses in the foreclosure process. I also learned that the banks, understandably enough, wanted as broad of a release as possible that grants them immunity from all of their alleged misconduct. Stuff that had nothing to do with foreclosure abuses, things that created the bubble in the housing market and brought about the crash.
I took a hard line that we shouldn’t release that sort of conduct and we shouldn’t release claims that haven’t been investigated, and started my own investigation. Over the course of going back and forth with my federal counterparts about our investigation and their efforts to negotiate a settlement, it became clear that there were some areas that we could do a lot of really good work on if we collaborated.
The goals of the effort really are to establish accountability and hold people accountable, those who caused this harm—make sure we get relief to the millions of people who are injured. In New York, one in 10 homes is headed toward foreclosure. Nationally, there are 15 million families that are underwater. That means their homes are worth less than the mortgages they’re trying to carry.
C&S: Does this change the dynamics of the negotiations for a settlement?
ES: I think the settlement has been steadily improving since this process started. Most significantly, the releases have been narrowed to give us the ability to pursue the investigation and accountability and relief for those who were injured, both borrowers and investors, people who bought these bad securities, which included a lot of pension funds and mutual funds.
This was caused by human conduct. This was caused by reckless deregulation and some people just being too greedy for their own good. Brought down the economy, threw millions of people out of work. We intend to hold them accountable and get the facts out, so history doesn’t repeat itself.
C&S: Why the shift from the White House on mortgage fraud?
ES: I can’t say why they’re doing what they’re doing. Maybe they got fed up with their attempts at bipartisan collaboration with people who refuse to collaborate. It certainly made sense as our conversations emerged, just on the merits, that a joint investigation was the right way to proceed. I do think the president is reacting partly to the overreaching on the other side. That’s really what the debate is about, if you boil it down, in Washington. This is a debate over whether we should have the same set of rules for everyone—everyone should pay their fair share, get a fair shot, which is really what the president said in his speech.
C&S: Are you optimistic about the outcome?
ES: We’re still working out details of the settlement. As far as the releases go, I do feel comfortable that the final releases will enable our joint investigation to proceed.
—Andrew J. Hawkins
This first appeared in City & State. For more local politics, visit cityandstateny.com
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