In separate actions, investigations were announced in recent days against Bank of America, Bank of New York Mellon and Deutsche Bank, for violations in the mortgage securitization fraud. In what could be a significant development, the Attorneys General of New York, Eric Schneiderman, has teamed up with his counterpart in Delaware, Joseph "Beau" Biden III. Between the two states, they account for 100% of the "trust law" (New York 80%) applicable to banks, who acted as "trustees" in the multibillion-dollar mortgage securitization theft. The two, acting together, have requested documents from Bank of New York Mellon and Deutsche Bank. Separately, Schneiderman has expanded his probe to include Bank of America.
These means a total of three states' Attorneys General, those of New York, California and Delaware, are conducting parallel investigations into mortgage fraud by Wall Street.
The two AGs are looking into the paper trail when the mortgages were transferred under the "securitization" process. The rules for property transfer under "trust" law are detailed and explicit; a failure under any aspect of the transfer process would result in the invalidation of the entire "collateralized" security, leaving the banks on the hook for the billions they thought they "sold." As described by Georgetown University bankruptcy expert Adam Levitin, in testimony to subcommittee of the House Financial Services Committee, "If mortgages were not properly transferred in the securitization process, then mortgage-backed securities would in fact not be backed by any mortgages whatsoever, [and] could cloud title to nearly every property in the United States." It would also raise the question of the legality of the resulting millions of foreclosures on American homeowners, since the banks cannot prove "ownership" of the foreclosed property.
In reality, the entire process needs to be "frozen;" the derivatives declared null and void; the mortgages are examined in their original condition, to keep people in their houses, while we find out who owns what. Glass-Steagall would help this process.