The Obama administration wants to reach a broad settlement with some of the nation’s banks over some sketchy foreclosure practices they have allegedly engaged in during the past few years. But New York State Attorney General Eric Schneiderman is resisting pressure from Washington to sign on to the proposed settlement. He and several colleagues argue that the settlement would make it more difficult for them to prosecute banks suspected of wrongdoing.
Mr. Schneiderman’s position is admirable. If he believes the settlement is not in the best interests of New York consumers, he should continue to resist. That won’t be easy, because the attorney general’s fellow Democrats in Washington are putting pressure on his allies—just as bank officials are putting pressure on federal officials to finalize the settlement.
When politicians and special interests are eager to get a deal done quickly, consumers and taxpayers generally should be skeptical—especially on the eve of an election campaign.
Under the proposed settlement, which grew out of revelations that some banks submitted improper paperwork in foreclosure proceedings, some of the nation’s largest lenders would be asked to fund a $20 billion pool of money that would be made available to consumers who wish to modify their loans. In return, state attorneys general who are investigating these practices in their individual jurisdictions would agree not to pursue litigation.
Mr. Schneiderman and several other attorneys general are reluctant to surrender their ability to litigate—after all, litigation is what they do. As long as they are not looking to scapegoat the banks, they should continue to resist the Obama administration’s pressure to get a deal done in time for the 2012 presidential campaign.
Mr. Schneiderman is taking a principled stand. That’s rare enough these days, and something worthy of admiration.