Schneiderman has said little about his investigation, though The Huffington Post reported last year that Bank of America is a target, and that Schneiderman has also sought documents from Goldman Sachs and Morgan Stanley.

A legal victory in that case--assuming one is eventually brought--would lower the bar significantly for private litigation, Miller says.

"If he wins and they're fraudulent you could see the banks having to buy all this stuff back, or would they just negotiate some big deal?" Miller wonders aloud.

And how much would such a deal cost the banks?

"That number is so big I don't even want to think of it," Miller says.

A Nov. 14 editorial in The New York Times states that Schneiderman and other "rebel attorneys general want the banks to hand over more than $200 billion, which would enable the government to write down tens of millions of mortgages." The editorial, which is republished on Schneiderman's website, does not say where that figure came from. A Schneiderman spokesman declined to discuss details of the investigation.

But that $200 billion figure--assuming it is in fact what Schneiderman and the others are seeking --would not take into account private litigation, nor what would presumably be sweeping reforms in the mortgage business going forward, potentially taking a bite out of future bank profits.

As far as U.S. banks are concerned, even the threat of a Eurozone breakup may look tame alongside New York State's Attorney General.

-- Written by Dan Freed in New York.

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