Elmont Online

ALBANY -- For now, it's 23 lawyers against the financial world.

State Attorney General Eric Schneiderman has gained considerable attention -- and praise from liberal groups -- for his investigations of the actions of major banks in the run-up to the foreclosure crisis and financial collapse of 2008.

Speaking Thursday to the Times Union editorial board, the attorney general expressed a befuddled frustration that federal officials haven't seized or built on his efforts.

"In the last month (President Barack Obama) has taken a much more populist tack in his rhetoric, and we're continuing to talk with him, but I would describe the approach ... as kind of a 'tough love' approach. I think it could be good for the President, good for the country. It's kind of what's reflected by the Occupy Everywhere movement," he said.

"I have a disadvantage here because I only started doing this in the spring of 2011," Schneiderman added, "and I honestly do not know to this day what the Obama administration did, if they had information and decided not to move forward, or if they just dropped the investigations in an early state -- I don't know."

So Schneiderman soldiers on. Sketching a diagram on a legal pad, he outlined the chain of events leading to the housing crisis, including the practices of mortgage bundling, securitization, insurance and rating. Investigators -- about 20 from his office and three assigned by Delaware Attorney General Beau Biden -- have been looking for fraud at every stage in the process.

Schneiderman's assertiveness on the issue became a national story this summer when he refused to sign off on a settlement involving attorney generals from all 50 states that dealt with how banks handled foreclosure proceedings. Schneiderman was afraid the settlement would grant the banks overly broad immunity.

If his investigation yields enough to lodge charges stemming from earlier acts -- before the foreclosures started -- it's possible a larger settlement could be structured that would result in banks writing down some of the debt owed by homeowners, some of whom have "negative equity" -- that is, they owe more money for their house than it will be worth. In such a situation, a homeowner has little incentive to make payments (you'll never recoup your investment) and banks have no incentive to foreclose (they'll lose on their investment -- and want their cash back, not the property).

"We're not going to get an economic recovery until we end the paralysis in the housing market ... Everyone starts making money when we improve the economy," Schneiderman said. "The President is not, I don't think, going to get a jobs bill that requires congressional approval. This is something he can get that helps another big part of our economic problems in this country through a negotiated settlement. So I'm encouraging them they should do so."

Reach Vielkind at 454-5081 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it .