Five years ago this weekend, Lehman Brothers filed for bankruptcy, triggering a global financial crisis. Attorney General Eric T. Schneiderman has issued the following statement on the fifth anniversary of the financial meltdown of 2008 and the steps he has taken to help New York's working families recover:
"Five years ago, fraudulent acts, misjudgment, and a pursuit of profit over principle brought the American markets to the verge of collapse, undermining the economic security of families across our state. While our economy is on the road to recovery, the fight to give working families a fair shake continues. We still have a long way to go to rebuild the wealth of the middle class, restore investor confidence in our financial system, and make the housing market an engine for faster job growth, the biggest impediment to our overall recovery.
"With too many New Yorkers still fighting foreclosure, and banks that still refuse to play by the rules, we must do everything in our power to stand up for hardworking families. That includes helping rebuild communities, educating homeowners on their rights, and expanding access to legal guidance that can make the difference between a family keeping their home or facing foreclosure. It means continuing the fight for real accountability for the illegal and deceptive conduct that created the housing bubble and crashed the global economy. The 2008 financial crisis was a tragic and powerful reminder that when the rich or powerful play by their own rules, it undermines our whole nation. By returning to our founding principle of equal justice under law, we can not only restore the trust of the American people in our financial system, but also guarantee that this kind of crash will never happen again."
In the past two years, Schneiderman has made several efforts to bring accountability for the misconduct that led to the crash of the American markets and to support homeowners impacted by the financial crisis.
In January 2012, Schneiderman was named co-chair of President Obama's Residential Mortgage-Backed Securities Working Group, a state-federal task force dedicated to investigating those responsible for the financial crisis. Since joining the Working Group, the attorney general has filed lawsuits against J.P. Morgan and Credit Suisse for deceiving investors as to the quality of loans packaged in residential mortgage-backed securities, which contributed to the financial crisis.
Attorney General Schneiderman also led a coalition of 49 state attorneys general in reaching the $25 billion National Mortgage Settlement with the country's five largest mortgage servicers. The settlement required the participating institutions to provide direct relief to victims of wrongful foreclosures and preserved a wide range of claims for further investigation and prosecution.
Schneiderman has since used New York's $136 million settlement award to assist the recovery of at-risk homeowners and communities. In June 2012, the attorney general launched his Homeowner Protection Program, a three-year, $60 million commitment to fund housing counseling and legal services for struggling New Yorkers. HOPP has since subsidized free foreclosure prevention services for 35 legal services organizations and 59 housing counseling agencies statewide. HOPP has also funded a 24/7 foreclosure hotline and a public service announcement to enhance statewide awareness and access to these services.
In addition, Schneiderman has announced his intention to dedicate $20 million of the settlement funds to develop "land banks" across New York, which will help communities restore properties vacated or abandoned through foreclosure.
Though the National Mortgage Settlement has already provided billions of dollars in consumer relief to New Yorkers, Schneiderman demanded consistent compliance with the settlement by all participants, taking action against Bank of America and Wells Fargo for violating its terms by failing to improve their servicing practices.
Schneiderman has also brought the concerns of the many New Yorkers currently facing foreclosure to the New York State Legislature, proposing two pieces of legislation. First, the "Certificate of Merit" bill, which was signed into law, will help expedite homeowners' participation in court-supervised mediation sessions where they can negotiate alternatives to foreclosure with their lender. Second, the Foreclosure Fraud Prevention Act, which was passed by the Assembly, would impose criminal penalties on mortgage lenders and servicers who intentionally engage in deceptive conduct in their handling of foreclosures.