FDIC Backs Schneiderman, Blocks Bank of America's Foreclosure Fraud Settlement

 New York Attorney General Eric Schneiderman has faced a lot of heat for his intervention in an $8.5 billion settlement between Bank of America and its investors over shady mortgage dealings. 

But now the FDIC, which is the receiver for failed banks (it's the federal organization that takes apart banks that collapse and, incidentally, insures your deposits so if your bank crashes you don't lose your cash) has stepped in as well, joining Schneiderman and Biden in filing an objection to the settlement, saying that it doesn't have enough information to approve the deal. 

The deal, would end the ability of attorneys general and others to pursue other claims against the bank and the mortgage lender Countrywide, which it absorbed back in 2008. 

Bloomberg reports, "If the settlement doesn’t get court approval and Bank of America goes back to the negotiating table, it will become more expensive for the bank." 

Bank of America, of course, was just bailed out by billionaire investor Warren Buffett after a meeting with President Obama, whose justice department has been pressuring Schneiderman and others to let deals with the banks go forward. 

Meanwhile, all 21 members of the New York House delegation have signed a letter to Iowa Attorney General Tom Miller, protesting Schneiderman's removal from the committee negotiating the nationwide settlement with all 50 attorneys general and the big banks. 

Phillip Anderson at The Albany Project writes: 

"This is pretty heartening development in as far as I had assumed that a number of our House Dems would be perfectly OK with aiding and abetting a clean get away for the banksters on this score." 

He's got the full text of the letter at his site. 

AlterNet / By Sarah Jaffe

Posted at August 30, 2011, 4:56am

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