Liberals hope Obama has committed to Schneiderman's cause, and not the other way around
Eric Schneiderman. Courtesy of Schneiderman for Attorney General.
12:30 pm Jan. 26, 2012
To the most ardent seekers of economic justice after the federal housing crisis, there is exactly one reason to be optimistic about the Obama administration's new mortgage investigation unit.
"There's already a task force, and it sounds like this new task force would have essentially the same assignment that the old task force had," said Representative Brad Miller of North Carolina, a Democrat. "The thing I think is different is Eric Schneiderman's participation."
On Tuesday night, after months of serving as a thorn in the administration's efforts to negotiate a comprehensive settlement between the nation's attorneys general and some of its biggest banks, New York's attorney general settled into a seat just behind Michelle Obama in the House gallery, and listened as President Obama announced a new unit dedicated to investigating the housing crisis, to be co-chaired by him.
The announcement was something of a surprise.
Since well before his 2010 election as attorney general, Schneiderman has been a proudly liberal public official, even by New York standards. He won a seat in the State Senate as a reformer from the Upper West Side, survived a subsequent Republican attempt to gerrymander him out of office, pushed aggressively for gay marriage and gun control, and then ran as the left-most candidate in a crowded Democratic primary for attorney general, with tacit opposition from the very popular, more centrist Democrat who was vacating the office to run for governor.
Schneiderman's position on the entities who bear responsibility for the mortgage crisis has been characteristically progressive, and uncompromising: he opposed any settlement that would restrict the ability of the attorneys general to investigate and pursue big banks.
On Monday, a group of Democratic attorneys general, joined by Housing Secretary Shaun Donovan, convened in Chicago amid reports that the White House had set a self-imposed deadline to announce a settlement at the president's State of the Union speech.
On Tuesday afternoon, the Huffington Post reported that the administration would back an expanded probe, with Schneiderman at the helm.
The deal appeared to have been of the late-breaking variety. Congressman Miller was already on the House floor for the president's speech when someone forwarded him the story; he said all his conversations to that point had been about the likelihood of a settlement.
"It struck me as kind of big news," he said. "It's not anything I was expecting."
Iowa Attorney General Tom Miller, who has led the negotiations for a settlement and who removed Schneiderman from his role in those talks after determining that his rigidity was undermining those settlement efforts, was notified of the new task force prior to the president's announcement, according to a source with knowledge of the conversation, who declined to say when exactly that conversation occurred.
For leaders of the sizeable liberal coalition that has rallied behind Schneiderman's efforts to pursue the big banks on behalf of small investors and homeowners, there's hope that his appointment represents a decision by the administration to come around to Schneiderman's way of thinking, and not the other way around.
"The only hope I have for this investigation is the fact that Eric Schneiderman is co-chairing it," said Justin Ruben, the executive director of MoveOn.org, which has mobilized its five million members in opposition to a bank settlement.
"I'm encouraged that the president is doing it, and I'm particularly encouraged that Eric Schneiderman is the one doing it," said the liberal congressman Jerrold Nadler, who co-signed a letter back in August, along with the rest of the state's Democratic delegation, criticizing the Iowa attorney general for removing Schneiderman from the settlement talks.
The new unit will augment Schneiderman's existing investigation with the vast resources of the federal government, including attorneys and investigators from the Department of Justice, the Securities and Exchange Commission, and the Internal Revenue Service, and expand his jurisdiction beyond New York's borders.
It's unclear exactly how long the new unit was in the works—people with knowledge of the timeline said they weren't authorized to share it. But the hot dispute between the attorney general and the White House over the mortgage settlement had already shown signs of cooling: Schneiderman was enlisted by the Democratic National Committee last week for a conference call questioning Mitt Romney's reluctance to release his tax returns. And on Tuesday, just before the news of his appointment broke, Schneiderman's office sent out an advisory that he would be appearing with Richard Cordray, the new head of the Consumer Financial Protection Bureau, to announce a new partnership for protecting military servicemembers from fraud.
One question now is how long Schneiderman will have the support of his fellow attorneys general, even the ones sympathetic to his cause.
Neither Delaware Attorney General Beau Biden nor California Attorney General Kamala Harris, both of whom joined Schneiderman in opposing a 50-state settlement, were included among the supportive quotes sent out on Tuesday night. (Biden's office subsequently told the New York Times they were open to collaborating with Schneiderman.)
There will, in other words, be tension between attorneys general eager for a big settlement and the political boost that comes with it, and the extraordinarily high hopes of the grassroots Schneiderman partisans who want him to do nothing less than transform the balance of power between the banks and consumers, and who fear that this appointment could end up being a sort of front-door co-optation.
"We couldn't have chosen a better chairman, but at the end of the day, it's still a committee," said Jordan Estevao, the campaign director with National People's Action, which has organized against a settlement and protested the A.G.s meeting in Chicago on Monday.
"The proof is in the pudding," said Ruben, the MoveOn executive director. "Everybody is going to judge this by whether it actually yields serious accountability in the form of people going to jail, and or hundreds of billions of dollars in principal write-downs and penalties. And I think the good thing is Eric Schneiderman and the White House both know that."
Miller, the congressman, said he didn't think Schneiderman would have signed on if he wasn't guaranteed the latitude to pursue, and perhaps prosecute, all instances of illegal activity.
"I think he's got a great deal at stake," Miller said. "His credibility on this issue would be at stake if he agreed to be window dressing for a task force that didn't do anything."
