Schneiderman Asked to Lead Financial Crimes Unit

President Barack Obama is in the process of forming a special unit within the Justice Department’s Financial Fraud Enforcement Task Force devoted to investigating abusive lending and securitization practices during the buildup to the economic crisis, and has asked New York State Attorney General Eric Schneiderman to lead it, according to MSNBC. The initiative, which was announced during the president’s State of the Union address this week, will unify the various state-level investigations into illegal conduct before and during the economic crisis into one cohesive inquiry, according to the Los Angeles Times.

The announcement comes after reports of wide skepticism on the part of state attorneys general, including Schneiderman, on a potential settlement with the nation’s five largest banks for their role on the crash, despite White House pressure to sign on to the agreement. Indeed, Schneiderman himself criticized the settlement, which would amount to about $25 billion, as too easy on the banks and have demanded a tougher stance, according to the New York Times. Analysts are wondering whether this new unit will scuttle the proposed settlement, considering that paying the fine would still leave banks open to prosecution as part of this new initiative, according to CNBC, though Schneiderman said they wouldn’t because the bank settlement concerns post-crash conduct while the federal investigation will concern itself with pre-cash crimes, according to the LA Times.

The task force housing the new unit, the Financial fraud Enforcement Task Force, has actually been in existence for the past three years but, so far, has not been that active since it was first formed in 2009, according to a separate New York Times article. Scheneiderman, however, has promised an aggressive probe in every aspect of the creation of the bubble and the consequent crash, including the securitization of mortgages, according to the LA Times.