Senator Asks AG to Reject Foreclosure Settlement Waiving Banks' Liability

Sen. Maria Cantwell Thursday asked Attorney General Eric Holder to avoid agreeing to any settlement between banks and states across the country regarding foreclosure abuses that includes immunity from future litigation.

The Washington Democrat wrote a letter to Holder objecting to a potential deal that would reportedly allow financial institutions to settle for $20 billion in exchange for ending a probe into the other factors of the mortgage crisis that caused the 2008 economic meltdown, such as the securitization of subprime loans.

A coalition of 50 state attorneys general, state and federal officials have been in negotiations with five major financial institutions regarding robo-signing of documents and other allegedly improper practices.

"I urge you to ensure that any settlement with mortgage servicers over alleged foreclosure abuses does not absolve liability for crimes and wrongdoing that has yet to be fully investigated, and ensures just compensation for victims," Cantwell said.

The issue of future liability caused fractures among the state attorneys general negotiating with banks, including Bank of America, JPMorgan Chase, Wells Fargo, Ally Financial and Citigroup.

New York Attorney General Eric Schneiderman, a Democrat, was kicked off an executive committee in August for his opposition to giving banks immunity in future state investigations. He said in November that he and Delaware Attorney General Beau Biden, a fellow Democrat, had launched a four-pronged investigation into the mortgage bubble and crash beyond foreclosure practices.

California Attorney General Kamala Harris exited negotiations in September, while Massachusetts Attorney General Martha Coakley launched earlier this month her own suit against the five financial institutions, plus a company behind a controversial electronic mortgage registration system, alleging foreclosure abuses.

Other attorneys general have planned to pursue investigations into the foreclosure mess.

"Without a thorough investigation, it is impossible to truly estimate just how pervasive the defects in the foreclosure and securitization process are," Cantwell wrote in the letter to Holder. "The sheer magnitude of the potential fallout from these defects demands that we undertake a full investigation to uncover the true scope of wrongdoing before providing blanket immunity to the perpetrators."

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