Is Mortgage Task Force A Way to a Legal Deal?
Davidson, Kate, American Banker
Byline: Kate Davidson
WASHINGTON - Amid months of uncertainty about the fate of a broad mortgage servicing settlement between regulators and banks, many observers are looking to the creation of a new joint task force as a way to prompt negotiators to work out their differences.
The investigative unit, unveiledby President Obama in his State of the Union address Tuesday, could help nudge some holdouts in the settlement back to the table, observers say. The creation of the unit appeases some state attorneys general who are facing political heat over claims that previously disclosed settlement terms were too lax. The unit may also help satisfy liberal groups intent on are seeking the toughest deal possible.
One key holdout in the settlement is New York Attorney General Eric Schneiderman, who was named a co-chairman of the new task force.
"I think this move allows Schneiderman to come in from the cold" and "makes him part of the team, which in my opinion makes the AG settlement on robo-signing much more likely, because it gives political cover to some of the stragglers," said Isaac Boltansky, an analyst at Compass Point Research and Trading in Washington.
Liberal groups have hailed the announcement of the task force. They had wanted a national settlement to sill allow expanded investigations going forward, an effort that large banks opposed, and say Schneiderman's participation in the task force gives it credibility.
"Just weeks ago, this investigation wasn't even on the table, and the big banks were pushing for a broad settlement that would have made it impossible," MoveOn.org said in an email to its members Wednesday. "Your work changed all that. This is truly a huge victory for the 99% movement."
Yet although some observers say Schneiderman's inclusion in the task force could bring him into the settlement fold, he would not say whether he would participate in the settlement following a Washington press conference this week, focusing only on the work of the new investigative unit.
"We're undertaking a more coordinated effort to pull together all of the various strands of investigations relating to the conduct that created the mortgage-backed securities bubble and led to the market crash," Schneiderman told reporters. "There have been investigations going on in various states and branches of the federal government. We're now making a concerted effort to pull everything together and move forward aggressively to address these issues."
On Wednesday another notable holdout, California Attorney General Kamala Harris, reiterated concerns about the proposed settlement terms. In a statement, a spokesman for Harris called the current deal "inadequate." (The proposed terms are said to include total fines from the five largest servicers of $17 billion to $25 billion, as well as a commitment that servicers will forgive loan principal for troubled borrowers.)
"Our state has been clear about what any multistate settlement must contain: transparency, relief going to the most distressed homeowners and meaningful enforcement that ensures accountability," Harris' spokesman said. …