Wall Street is Split Over the Bank Foreclosure Deal

Wall Street’s biggest lobbying group is split over a proposed settlement of state and federal foreclosure probes, after a committee of money managers signaled it opposes terms letting banks push some costs onto bondholders.

The Securities Industry and Financial Markets Association’s Asset Management Group planned to release a statement last week urging government negotiators to protect innocent investors, amid reports that banks will get credit for lowering the balances of mortgages packaged into bonds, three people familiar with the matter said. Sifma’s leadership said no. The panel’s members oversee $20 trillion and include BlackRock (BLK) Inc. and Pacific Investment Management Co.

Sifma elected not to issue the statement “because the settlement surrounds potential legal issues involving the commercial interests of many of our members,” said Cheryl Crispen, a spokeswoman for the group in New York. “Sifma generally does not intervene in such matters and remains focused on matters of policy and advocacy.”

The rift within Sifma follows investor advocates’ complaints that bondholder interests are often trumped by those of the biggest banks when government officials act to address the fallout from the U.S. housing slump. Language similar to the planned statement was included in a Jan. 31 release by the Association of Mortgage Investors, a smaller trade group for bondholders that unlike Sifma doesn’t also lobby on behalf of firms that issue, underwrite, service and trade debt.

Rest here…

Copy of their letter below…

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4closureFraud.org

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The Association of Mortgage Investors Cautions State Attorneys General:
Don’t Rush a Settlement; Get It Right