Mortgage Settlement Talks Bifurcate

The Feds and the state Attorneys General have separated their settlement talks with mortgage servicers and banks:

Iowa Attorney General Tom Miller said the reported side settlement between mortgage servicers and federal regulators will in no way affect the ongoing investigation he is leading along with 49 other state attorneys general.

Several media outlets are reporting that the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Reserve are engaging in talks with mortgage servicers and that agreements could be signed as early as next week.

"A separate settlement by the Office of the Comptroller of the Currency will not affect our investigation," Miller said in a statement. "The settlement neither preempts, nor impacts our efforts. State attorneys general will continue to work together unabated with a broad coalition of federal partners."

My guess here is that, notwithstanding AG Miller's attempt to come up with a weak deal, see Yves Smith's coverage for more information, is that the OCC's proposed deal is too weak for even him to follow up on.

Additionally, they may be attempting to distance themselves from the manufactured sh%$ storm about Elizabeth Warren advising them.

Of course, if you are an optimist about this, and I am not, it could be that the AGs realized that the two efforts were incompatible, since a federal settlement is primarily about looking at future behavior, while the Attorneys General are charged with investigating and pursuing prior and ongoing wrongdoing.

My guess is that there is some political heat being generated, both from the teabaggers who are crying, "leave Britney the big banks alone," and people interested in property rights and the rule of law, who want criminal prosecutions of what is fraud and theft an an almost unimaginable scale.

H/t Yves Smith.