What do Bank of America, Goldman Sachs, and Morgan Stanley have in common? They all probably wish Eric Schneiderman would go away. Schneiderman is the attorney general of New York, and his office is arranging meetings with representatives of these three Wall Street banks in order to learn more about their loan pooling practices and what role they may have played in the financial crisis.
According to The New York Times, Schneiderman's office is conducting what looks like a "quite broad" investigation, though it's still "in its early stages." Schneiderman seems to be interested in the mortgage securities operations at these banks. As Gretchen Morgenson for the Times puts it, the banks "bundled thousands of home loans into securities that were then sold to investors"--even though the banks may have known beforehand that the loans were risky and could lead to losses.
As both the Times and the Wall Street Journal report, neither Bank of America, Goldman Sachs, nor Morgan Stanley had any comment about Schneiderman's probe.
As the Wire noted yesterday, it hasn't been a good week for major financial institutions. On Monday, it was reported that the Department of Housing and Urban Development is investigating the nation's five largest mortgage companies--Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial--to see whether they violate the False Claims Act, a law Congress passed in 1863 to crack down on companies who defraud the government.