N.Y. Attorney General Wants Answers From Big Banks

Posted on May 17, 2011

Flickr / Protest Photos1

A woman protests the Wall Street bailout in New York City in 2009.

Homing in on mortgage-backed securities, New York Attorney General Eric Schneiderman has requested records from Bank of America, Morgan Stanley and Goldman Sachs as part of a broad investigation into the causes of the financial meltdown of 2008. Hot on the heels of Galleon Group hedge fund billionaire Raj Rajaratnam’s federal conviction last week, Schneiderman’s investigation may lead to a case against the companies most responsible for the unsound business practices that helped tank the American economy. There’s a long way to go, but let’s hope he can bring the full force of the state’s Martin Act—famously used by Eliot Spitzer—to bear on some of those responsible for this misery. —KDG

Wall Street Journal:

Thought the probes were played out? The investigations all in the past? Did you think that anyone who’s going to pay for the calamity that was the financial crisis of 2008 had already paid their dues?

Well, you might be right, but the New York Attorney General, Eric Schneiderman, has begun an effort to prove you wrong.

Schneiderman has opened an investigation into the packaging of mortgage loans into securities, in the latest sign of increased scrutiny of the mortgage industry.

Schneiderman will hold meetings with executives of several major banks, including Bank of America, Morgan Stanley and Goldman Sachs, according to people familiar with the investigation. He intends to discuss securitization of mortgage loans and other mortgage practices and has requested related documents from the firms, these people said. The meetings over securitization are expected to happen in the coming week.

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