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Iowa Says State AG Accord Won’t Release Banks From Liability

The 50-state attorney general group investigating mortgage foreclosure practices won’t release banks from all civil, or any criminal, liability in a settlement, Iowa Attorney General Tom Miller said.

Miller said criticism of the multistate case was based on the “false notion” that its organizers were prepared to release the banks from all liability, including criminal liability. New York Attorney General Eric Schneiderman has been portrayed as resisting that position, Miller wrote in a letter to New York lawmakers who complained about Schneiderman’s removal from an executive committee working on the agreement.

“The negotiation committee, working on behalf of all 50 states, does not have any intention of constraining the office of the New York attorney general in any way, has not tried to do so and could not do so,” Miller said. “Schneiderman was removed from the executive committee because he has, over the last several months, undermined our efforts to reach an agreement.”

Schneiderman walked away from negotiations with the banks, Miller said. A spokesman for Schneiderman, Danny Kanner, declined to comment on Miller’s letter.

Attorneys general from all 50 states last year announced their investigation into the foreclosure practices of banks following reports that faulty documents were being used to seize homes.

Photographer: Andrew Harrer/Bloomberg

The 50-state attorney general group investigating mortgage foreclosure practices won’t release banks from all civil, or any criminal, liability in a settlement, Iowa Attorney General Tom Miller said. Close

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Photographer: Andrew Harrer/Bloomberg

The 50-state attorney general group investigating mortgage foreclosure practices won’t release banks from all civil, or any criminal, liability in a settlement, Iowa Attorney General Tom Miller said.

Since then, a group of attorneys general and federal officials, including from the Justice Department, have been negotiating a settlement with the five largest mortgage servicers in the U.S. -- Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM), Citigroup Inc. (C), Wells Fargo & Co. (WFC) and Ally Financial Inc.

Miller announced Aug. 23 that he removed Schneiderman from the executive committee of the group. The New York legislators said this removal set a dangerous precedent, stifling dissent within the 50-state group.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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