California Lieutenant Governor Gavin Newsom (D) says that he wants the U.S. Department of Justice to investigate "threats" against local communities that are considering using eminent domain to seize and restructure poorly performing mortgages to benefit cash-strapped homeowners, Reuters reported yesterday. Newsom sent a letter on Monday to U.S. Attorney General Eric Holder asking federal prosecutors to investigate any attempts by Wall Street investors and government agencies to "boycott" California communities that are considering such moves. Newsom, who was previously mayor of San Francisco, warned the Securities Industry and Financial Markets Association in July to "cease making threats to the local officials of San Bernardino County" over a proposed plan to seize underwater mortgages from private investors. Newsom wrote that while he is not endorsing the use of eminent domain at this time, he wants communities in California to be able to "explore every option" for solving their mortgage burdens "without fear of illegal reprisal by the mortgage industry or federal government agencies."
