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Is New York Attorney General Eric Schneiderman the One to Finally Fight Big Money's Power in Politics?

Schneiderman is the best and probably last hope for some kind of public retribution against the banksters, some righting of wrongs--rolling of heads--as far as the Great Recession.

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"I think the banks are very scared," said Tom Adams, a former securities insurer who now writes about the banking industry for nakedcapitalist.com. Adams says he believes Schneiderman has no shortage of hurt and angry former Wall Street players willing to talk to him about what went down.

"To impose accountability seems to be an overarching theme for him, by pursuing this in a way the SEC hasn't," Adams went on. "A crisis happened and there were people responsible. I think he has fertile territory in MBS [mortgage backed securities] and CDOs [collateralized debt obligations] and if he actually names individuals and gets meaningful time, that would be significant, more than taking away the jets or the Hamptons homes."

For all his mildness, Schneiderman disdains the current discourse of Washington.

"One of the things that concerns me right now is this effort to rewrite history, to move us away from the fact that it was bad deregulatory moves and greedy, risky conduct that caused this to happen and that it wasn't the fault of the teachers and cops and firefighters who now seem to be the targets of this effort to cut spending. The markets didn't crash because we were paying too much to teachers."

Nice words to hear from someone with subpoena power on Wall Street. But in June, Iowa Attorney General Tom Miller booted Schneiderman off the 50-state AG's committee that's been trying to make its own deal with the banks over mortgage servicing. Miller's spokesman in Des Moines said Schneiderman's desire to go after the big fish -- the investors and banks -- would hurt consumers.

"We are trying to focus on homeowners, not investors," said Geoff Greenwood of the Iowa AG's office. "We are focused on foreclosure, servicing. We are not trying to address everything under the sun in connection with our financial crisis and we think that by including securitization we are definitely stalling the case, broadening beyond homeowners and potentially pitting homeowners against investors."

Schneiderman responds that he'd rather not "get into a tit for tat" over what happened with the Iowa AG, but insisted that their tack is too narrow. So, he's pursuing a New York-based investigation, which may or may not lead to a separate and better deal, leveraged with depositions and subpoenaed documents revealing facts about the mortgage servicing issues that affect consumers, and also the so-called securitization issues -- the mortgage-backed securities and CDOs, investor products that actually led to the economic crash still playing out on the shabby streets and foreclosed homes of Main Street America.

"The sense of public confidence has been eroded so badly," he says. "People still haven't gotten over the crash and the bailout … and people are not going to be satisfied until they have a sense that those responsible have been held accountable. This was a man-made catastrophe."

Schneiderman said his office is "digging into" earlier phases of the mortgage-backed securities era. "Origination, the pooling of loans by the banks, the securitization, sale," he said, and activities after 2004, when the housing bubble started filling with air, and the numbers of mortgages dropped. "That's when things started to shift and you can see this whole process of -- making money of these securitizations was so profitable, that it didn't stop when it should have stopped."

Around the same time, he noted, investors began scrutinizing MBS more carefully, and diverting money into the more complex but also troubled collateralized debt obligations. As everyone knows in hindsight, the quality of mortgages deteriorated, the quality of securities deteriorated, and it all collapsed. "We are looking at what caused that to happen and what people were doing and what people knew," he said.