New York Attorney General Eric Schneiderman speaks to reporters at...

New York Attorney General Eric Schneiderman speaks to reporters at the Justice Department about the formation of a new unit to investigate fraud in residential mortgage-backed securities (Jan. 27, 2012). Credit: Getty Images

Did America's biggest banks get away with murder?

The banks didn't really kill anybody. But they were spotted loitering suspiciously in the vicinity of the worst financial crisis since the Great Depression, a crisis that blew up retirement savings, tossed millions of Americans out of work and threw the nation's economy into reverse.

At the heart of the meltdown was a runaway mortgage system replete with fraudulent loan applications, toxic mortgage securities, compliant rating agencies, and illegal foreclosure practices.

It's remarkable that, more than three years later, hardly anybody important has been brought to justice for all this. That's why we're cautiously optimistic to hear that state Attorney General Eric Schneiderman has been made co-chair of a federal task force formed to figure out whether anybody ought to be prosecuted for abuses -- in particular, for pooling all these bad loans into securities sold to investors.

It's quite a turnaround. Schneiderman has made a lot of powerful people mad in recent months by refusing to go along with other state AGs in a proposed settlement of a case against the big banks in their role as mortgage servicers. The dispute is over whether to settle allegations that the banks illegally foreclosed on homes by cutting legal corners in a rapid-fire process known as "robo-signing." The settlement was rumored at around $20 billion -- less than Wall Street's 2010 bonus pool.

To his credit, Schneiderman dug in his heels despite pressure from the White House and others. It's true that a quick settlement would bring some modest relief to homeowners and avoid further damage to the biggest banks, which not all that long ago had to be rescued by Uncle Sam. But Schneiderman worried that the settlement terms would make it impossible for him to go after the banks in his own, larger probe of the wrongdoing that led to the financial crisis of 2008. That probe might turn up misdeeds leading to a larger settlement or even criminal charges.

So now the president has named the state's top prosecutor to head a new federal investigative effort. That's all to the good -- as long as this move isn't a way of smothering Schneiderman's probe by killing it with kindness, or of allowing Schneiderman to cave in without losing face. Instead, we hope the White House has decided it has more to gain politically if Schneiderman succeeds, and that ultimately if it can't beat him, it might as well join him. New revelations of bank wrongdoing -- to say nothing of perp walks -- would fit the president's populist election-year theme.

For Schneiderman, the latest turn of events ratchets up the pressure to put up or shut up. But it's unlikely he'd carry things this far without a lot of confidence in the outcome. As a former securities lawyer, he's long been interested in whether the banks obeyed the law in packaging all those toxic mortgages into bonds, for example, or whether the banks were honest with investors about what was in these securities.

Somebody's got to fully investigate and nail any wrongdoers. So it's imperative Schneiderman not let himself be derailed by a Justice Department that, on this issue at least, never seemed to get on track.