One week after getting the boot by his fellow state attorneys general, New York's Eric Schneiderman is once again participating in the national debate on mortgage abuse.  While Mr. Schneiderman is no longer on the state attorney general committee that's conducting an investigation of mortgage abuse by banks, he now at least has a voice in the debate. 

Schneiderman's troubles began when he challenged the $8.5 billion settlement that had been arranged by Bank of America and Bank of New York Mellon - a deal that was endorsed by a coalition of major banks and (federal and state) government officials.  Schneiderman had clashed with the coalition over terms of the settlement which released Bank of America and other banks from future outside litigation - a condition Scheiderman was not willing to accept.  At the time, Iowa Attorney General Tom Miller said that “New York has actively worked to undermine the very multistate group that it had spent the previous nine months working very closely with.”

But Danny Kanner, a spokersperson for Schneiderman, countered by saying that "investigations by attorneys general cannot be shut down by efforts to settle quickly and those responsible must be held accountable."  The New York Times also provided support by previously reporting that the federal government was pressuring Schneiderman into agreeing to the settlement, which included such bank abuses as robosigning and submitting false foreclosure documents - meaning that state attorneys general could not subsequently go after the banks on these counts.

Timely Political Boost.  The Times announcement provided Schneiderman with a much-needed political boost.  One day after his removal, several national and state organizations voiced their support for his stance, including the NAACP and AFL-CIO.  So, while some government officials labeled Schneiderman as an obstructionist, the public largely viewed him as acting nobly by taking on the big banks.

Not to be undermined, Schneiderman is pursuing his own investigation into the securitization practices at big banks.  That led him to intervene in Bank of America's $8.5mn MBS settlement, which he called “unfair” and “inadequate.”   [Reuters, 8/23/11]