The Post ran an article on efforts to reach a settlement between 50 states suing banks over their mortgage issuance and foreclosure practices. The piece is about dissension among the plaintiffs, most notably New York Attorney General Eric Schneiderman, who is insisting on a stronger settlement that will address a wide range of abuses by the banks.

The piece is told primarily from the standpoint of those pushing for a quick settlement. Without comment it presents the clearly inaccurate assertion from Mr. Madigan in reference to Schneiderman's efforts to pursue a broader range of issues that:

"We don’t want to stop them from doing their investigation, and even if we wanted to, we couldn’t,  ... All states are sovereign.”

This is completely untrue. If there is a settlement, to which New York State is a party, that includes a list of abuses that the banks practiced in prior years, then New York State would be prohibited from taking further action on these issues. It is inconceivable that Mr. Madigan does not know this, so he was deliberately misrepresenting issues in his comment to the Post. The Post's reporters and editors should understand this basic fact as well.

 

[Addendum: Mr. Madigan notified me that his comment to the Post was in the context of saying that New York state could not be forced to be a party to a settlement that it felt was inappropriate. In this sense, it is true that Iowa's attorney general and the other attorney generals could not prevent NY from taking action on its own. He also said that the attorney generals have focused only on issues related to the servicing mortgages and not other potential legal problems stemming from issuance and securitization of mortgages.]

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