Eric Schneiderman Removed from Bank Settlement Panel

New York attorney general Eric Schneiderman has been removed from the executive committee negotiating a nationwide foreclosure settlement with U.S. banks.

Iowa Attorney General Tom Miller issued notice Tuesday that Eric Schneiderman was off the committee effective immediately, because New York had worked to "undermine" the group's efforts over the past few months.

The New York Democrat has taken a public stance against halting investigations of fraudulent business practices as part of the settlement.

Separately, Schneiderman has asked a New York judge to reject a proposed $8.5 billion Bank of America settlement. He said the proposal is unfair to investors and cited incomplete mortgage documentation that "apparently triggered widespread fraud."

In the 50-state talks, led by the U.S. Justice Department and Miller, officials say they want to help homeowners by enacting debt reductions, to set terms for loan servicing and to make changes in foreclosure practices.

Miller said the effort began in 2007 and that New York was intimately involved in every aspect of the investigation and possible settlement from October 2010 until June, when it declined to join an even smaller negotiating committee.

"Since that time, New York has actively worked to undermine the very same multistate group with which it had been working very closely over the previous nine months," he said.

Schneiderman spokesman Danny Kanner said the attorney general is "committed to a comprehensive resolution" to help homeowners and let the housing market start to recover. While it's Miller's prerogative to remove New York from the executive committee, Schneiderman will remain an active voice as part of the 50-state coalition, Kanner said.

"Ongoing investigations by attorneys general cannot be shut down by efforts to settle quickly, and those responsible must be held accountable," he said.