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NEW YORK - Eric T. Schneiderman, New York’s attorney general, is under pressure from the Obama administration to drop his opposition to a wide-ranging state settlement with banks over dubious foreclosure practices, say people briefed on discussions about the deal.
Shaun Donovan, secretary of Housing and Urban Development, and Justice Department officials have been campaigning to persuade the attorney general to support the settlement, the people said. Schneiderman and top prosecutors in other states have said the proposed settlement would restrict their ability to prosecute wrongdoing in a variety of areas, including the bundling of loans in mortgage securities.
The administration has been contacting not only Schneiderman but his allies, including consumer groups and housing advocates, seeking help to secure the attorney general’s participation, the people said.
The large banks, eager to settle, are frustrated with Schneiderman’s stance. Bank officials recently discussed asking Donovan for help, said a person briefed on those talks.
A possible settlement emerged in March, with institutions including Bank of America, Citigroup, JPMorgan Chase and Wells Fargo being asked to pay about $20 billion for loan modifications and possibly counseling for homeowners. The attorneys general would have agreed not to litigate further on matters relating to the improper bank practices. The banks balked at the $20 billion; talks seemed to stall as Schneiderman and a others questioned the deal.
