For almost four years, President Obama paid lip service to the idea of accountability for the acts of fraud committed by the largest Wall Street banks — even as the statute of limitations on prosecuting these brazen acts expires. But in his State of the Union message, Obama said he would seek accountability in the foreclosure crisis, a sharp turnabout.

How could the Obama White House look at a 50% loss rate on half a trillion dollars’ worth of collateralized debt obligations issued during the housing market madness and not bring prosecutions for securities fraud? Instead, Obama played the role of stooge perfectly. He did nothing just long enough to let the worst offenders on Wall Street walk on acts of securities fraud and other offenses. But maybe, just maybe, there will be justice after all.

During the State of the Union, Obama appointed New York Attorney General Eric Schneiderman head of the Residential Mortgage-Backed Securities Working Group, a position that has been empty since 2009. He belatedly, gave Eric Schneiderman control over federal resources to actually conduct wider investigations, something that ought have been done three years ago.

The placement of Schneiderman atop the RMBS Working Group implies that New York and the other states will cooperate in terms of both settlement discussions with respect to foreclosure abuses like robo-signing and other offenses. (An expected multistate settlement with attorneys general is said to be near.) Sources close to the NY AG's office, however, tell HW that the act of NY being back in the fold for now with respect to the foreclosure settlement process does not mean that New York must or will participate if the terms are too broad. 

“Bank America, JPMorgan and Wells Fargo reportedly promised up to $25 billion to fund a settlement, $15 billion of which goes to CA AG Kamala D. Harris,” notes the respected insider. “How do the other AGs and especially NY agree to a deal where 60% of the settlement goes to California?"

Read more on Whalen's thoughts about Schneiderman's role in pursuing the mortgage industry for acts of fraud in the March issue of HousingWire Magazine. Click here to subscribe.