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Mortgage settlement won't end probes: NY attorney general

Mortgage settlement improved because New York, California initially rejected it, some say. Even after mortgage settlement, New York Attorney General Schneiderman is still investigating related fraud.

By Michael VirtanenAssociated Press / February 11, 2012

In this 2011 file photo, New York Attorney General Eric Schneiderman answers a a question during a news conference in his New York City office. Mr. Schneiderman stood firm against major banks when he rejected an initial mortgage settlement a year ago, and now has authority to continue investigating related fraud.

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ALBANY, N.Y.

New York Attorney General Eric Schneiderman, a lead investigator into the mortgage collapse that wobbled the U.S. economy, hasn't taken the title "Sheriff of Wall Street" that one of his predecessors rode all the way to the governor's mansion.

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But he's not backing down, either.

He rejected a settlement with major banks a year ago because it shielded them from future investigations. For his efforts, he got bounced off a committee of attorneys general negotiating the settlement; more than 40 of them wanted to take the deal.

But after digging in, the soft-spoken, 57-year-old lawyer from Manhattan won. The states still got billions in settlement money, and he was tapped by President Barack Obama to co-chair a group to keep investigating. This week, shortly after the announcement of the $25 billion nationwide settlement with five major mortgage banks concerning foreclosure abuses, Schneiderman noted that it preserved authority to investigate and prosecute related securities fraud, authority that he insisted on.

"I am the lawyer for the people of the state of New York," Schneiderman demurred when asked about wearing the "Sheriff's" badge that once belonged to former Attorney General Eliot Spitzer.

Schneiderman, in his first year of office, kept Wall Street investigations going and started new ones. He insisted on preserving those, despite pressure from the banks, his fellow attorneys general, the Obama administration and homeowners needing the debt relief the settlement promised.

His ex-wife, attorney and political consultant Jennifer Cunningham, called it a "gutsy" stand in keeping withSchneiderman's character. She says she knows him better than anyone as co-parent of their teenage daughter.

"If he believes it's the right thing to do, he doesn't back down," she said.

Cunningham, managing partner of SKDKnickerbocker consulting, also guided Schneiderman's 2010 campaign victory over what some observers called one of the best candidate fields for attorney general.

Former Assemblyman Richard Brodsky, who lost to Schneiderman in that primary, said there is some value to what he did in the foreclosure settlement but the results remain to be seen.

"I think when California and New York said no, it put some spine in the whole process and they got a better deal," Brodsky said. "The real import here is the ability to continue to prosecute. That all will come clear over time, whether that amounts to anything."

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