Report: Mortgage Task Force to Take Legal Action

The mortgage task force formed by President Barack Obama to probe misconduct that contributed to the financial crisis will soon take legal action, New York Attorney General Eric Schneiderman said on Thursday.

Schneiderman, a co-chair of the task force, would not say whether cases would be brought against individuals or financial institutions. He also would not comment on whether criminal charges would be filed.

But he said his office would take action and that he expected his federal counterparts on the task force to do so as well.

"We'll see actions being taken sooner rather than later," said Schneiderman, speaking in an interview at his office in New York.

The Residential Mortgage-Backed Securities Working Group was formed in January, to probe the pooling and sale of risky mortgages in the runup to the 2008 financial crisis. Obama said he was creating the group to "hold accountable those who broke the law" and "help turn the page on an era of recklessness."

Schneiderman said he believes it is still necessary to go after the "bad actors" to restore confidence in the financial markets.

"It's important to convey the sense that no one is above the law. There's a set of rules to which all will be held accountable, including big players on Wall Street," Schneiderman said.

Schneiderman noted that only days earlier protesters had gathered in a park nearby to mark the first anniversary of the Occupy Wall Street movement.

Last year, Schneiderman fought to limit the scope of a $25 billion settlement with major banks over foreclosure abuses. He wanted authorities to retain the ability to probe misconduct in the securitization of mortgages, the area now being investigated by the task force.

The task force includes the Justice Department, the Securities and Exchange Commission, the Department of Housing and Urban Development and the Internal Revenue Service.

Schneiderman said the group, which has been criticized for inaction, had taken a few months to staff up. He said he was optimistic resources would continue to expand.

"History will show the working group acted pretty quickly given the circumstances," he said. "The important thing is to see results and then continued results ... (that) we don't just have one or two cases and then this peters out."

Another law enforcement official involved with the task force told Reuters on Wednesday that any action from the task force was more likely to be civil than criminal.

In the interview on Thursday, Schneiderman said he could not comment on whether there would be criminal charges.

When the group was formed, Attorney General Eric Holder announced civil subpoenas had been sent to 11 financial institutions. But little information has been made public since then.