The new federal task force led by New York Attorney General Eric Schneiderman sent subpoenas to the 11 largest financial institutions in the past few days as part of its investigation into possible residential mortgage-backed securities fraud.
President Obama formed the task group and announced it during his State of the Union address Tuesday. Federal officials did not disclose which 11 banks have come under investigation.
The new federal task force led by New York Attorney General Eric Schneiderman sent subpoenas to the 11 largest financial institutions in the past few days as part of its investigation into possible residential mortgage-backed securities fraud.
President Obama formed the task group and announced it during his State of the Union address Tuesday. Federal officials did not disclose which 11 banks have come under investigation.
Schneiderman said in a press conference Friday that he will be joined by Delaware AG Beau Biden, Massachusetts AG Martha Coakley, Nevada AG Catherine Cortez Masto, California AG Kamala Harris and Illinois AG Lisa Madigan.
U.S. Attorney General Eric Holder said 15 lawyers and investigators are working with the group. The FBI will add 10 agents, and another 30 lawyers and staff will join the group.
The Securities and Exchange Commission will also participate. SEC Director of Enforcement Robert Khuzami said there “would be no stone unturned, no dark corner unexposed to the light.”
“We have jurisdiction to go after every aspect of the mortgage bubble and the crash of the financial market,” Schneiderman said. “We have jurisdiction over every MBS issued over the last decade with Delaware and New York joining the group.”
Holder said if there is evidence of it, civil and criminal charges will be brought.
Department of Housing and Urban Development Secretary Shaun Donovan guaranteed any crackdown from the group’s investigation would include compensation to the homeowners affected by the financial crisis as well as investors.
“It became clear very quickly that Eric and I shared a vision that it would be a grave injustice to hold these institutions accountable and potentially have hundreds of billions be paid to private investors and pension funds but not make sure homeowners who hold those loans who depend on being able to get those loans fixed to be able stay in those homes,” Donovan said.
He also made clear the investigation and ongoing settlement negotiation between other state AGs and mortgage servicers over foreclosure problems would be separate and any charges would not release the banks from liability in the robo-signing scandal.
Iowa AG Tom Miller, heading up the mortgage servicer investigation, has said the resulting settlement would not release the banks from securitization or lending liabilities.
Schneiderman said there are some limitations to what documents the different participants could share. He clarified that the different charges brought against the banks may not have all of the AGs or DOJ listed as a prosecuting party but could be brought separately.
“I am confident you will see action in the weeks and days ahead that show this will be a very aggressive action,” Schneiderman said.
Write to Jon Prior.
Follow him on Twitter @JonAPrior.
