This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

New York AG's Crackdown Offers Political Profits

Stocks in this article: MS GS BAC

NEW YORK ( TheStreet) -- New York Attorney General Eric Schneiderman is taking his first crack at Wall Street, showing the difficulty banks face as they try to negotiate a broad settlement over mortgage-related issues.

Schneiderman is investigating Morgan Stanley (MS), Goldman Sachs (GS) and Bank of America (BAC), in an related to mortgage securitization practices, The New York Times reported late Monday.

New York Attorney General Eric Schneiderman

Schneiderman predecessors as New York attorney general, Elliott Spitzer and Andrew Cuomo, showed that being tough on Wall Street can be an effective way to earn credibility and name recognition, while jumpstarting a political career.

"Eric is just making his name; if you look at the polls, the banks are probably in last place of any industry and people were very suspicious of the bailout and suspicious of the activities of the banks," says George Arzt, a New York political consultant who has provided some support to Schneiderman in the past. "This is a very good move for any investigatory agency that has to get elected."

Schneiderman, a former State Senator, does not fit the mold of his predecessors, being more interested in issues of social justice than bringing in a big trophy in the form of a Wall Street boss.

"Many of your contemporary social justice issues can only be expressed or realized through legislation. Its not that easy to enforce your preferences for--whether its same sex marriage or affirmative action--through litigation, because courts have become increasingly conservative about the ability of a judiciary to impose social values," says John Coffee, professor at Columbia University law school.

As a result, Schneiderman cannot afford to take his eye off the ball in his current role, Coffee says.

"It's important for him to show that he's carrying on the momentum established by Spitzer and Cuomo and that he is going to be a successor to them rather than a quiet passive figure only interested in social justice," Coffee says.

That could be a problem for banks, which, according to The New York Times' report, are trying to reach broad blanket settlement with all major U.S. regulators over mortgage-related issues, including attorneys general in all 50 states. While regulators have shown some coordination with regard to foreclosure issues, especially robosigning, that is a long way from suggesting they could agree to a broad settlement on all mortgage matters, especially as new ones could come to light.

"There is broad disagreement among the attorneys general with regard to approaches to what has happened here in the mortgage space," says Gary Townsend, portfolio manager at Hill-Townsend Capital.

-- Written by Dan Freed in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs