I’ll pepper in my thoughts on the State of the Union Address throughout the day, but I would be remiss if I didn’t start with the announcement of a Unit on Mortgage Origination and Securitization Abuses (UMOSA) to investigate bank practices during the financial crisis. The unit will be co-chaired by Eric Schneiderman, the New York Attorney General who bravely waged an often lonely battle to stop a misguided settlement on foreclosure fraud. But “co-chair” is the operative word here, and it suggests that the entire maneuver was created to grease the wheels for the pre-arranged settlement, while turning this investigatory arm into nothing so much as regulatory theater.

This is the key part of Sam Stein’s story breaking the news:

The unit will not supersede the efforts already underway by the Department of Justice. Instead, it will operate as part of the president’s Financial Fraud Enforcement Task Force. In addition to Schneiderman, the unit will be co-chaired by Lanny Breuer, assistant attorney general at the Criminal Division of the Department of Justice, Robert Khuzami, director of enforcement at the SEC; John Walsh, a U.S. attorney in Colorado, and Tony West, assistant attorney general in the Civil Division at DOJ.

First of all, this becomes part of a three year-old Financial Fraud Task Force which has done approximately nothing on Wall Street accountability outside of a few insider trading arrests. So that’s the context of this investigative panel, part of the same entity that has spun its wheels. Second, the panel would only look at origination, where there have been plenty of lawsuits and where the main offenders are all out of business, and securitization, which may aid investors (that includes pension funds, of course) but not necessarily homeowners. Third, let’s look at the participants on this 5-member panel, which sounds to me like the absolute worst way to handle an investigation (you put an independent prosecutor in charge with a budget and subpoena authority if you really want to get something done, not a committee).

You have Lanny Breuer, last seen telling 60 Minutes every excuse in the book to justify the lack of prosecutions out of the Justice Department. He’s the co-chair of the panel who will “get tough” on the banks. Breuer was also a partner at the white shoe law firm Covington & Burling, which actually provided the legal underpinning to create MERS. Reuters was out just last week questioning whether Breuer should recuse himself from all financial fraud-related investigations; now he’s co-chairing one of the major ones!

Let’s move on. You have Robert Khuzami, who has turned enforcement into such a pathetic joke at the SEC that a judge stopped the no-fault settlements they were throwing at the banks left and right. Khuzami was also a former general counsel at Deutsche Bank, one of the leading trustees in securitization, precisely the area where this investigation would be aimed. John Walsh is unfamiliar to me (though he comes with decent credentials), and I know two things about Tony West: his previous experience has little to do with financial fraud, and he’s the brother-in-law of California AG Kamala Harris, one of the holdouts on the foreclosure fraud settlement (more on that in a minute).

I have a lot of respect for Schneiderman, at least for the stances that he has taken since becoming AG. He has begun a lot of investigations with respect to mortgages and foreclosures, but hasn’t actually put forward any lawsuits, unlike counterparts in Delaware, Nevada and Massachusetts. Maybe he just wants to work from within and leverage federal resources. Schneiderman says as much in his statement:

I would like to thank President Obama for his leadership in the creation of a coordinated investigation that marshals state and federal resources to bring justice for the victims of the misconduct that caused the mortgage crisis.

In coordination with our federal partners, our office will continue its steadfast commitment to holding those responsible for the economic crisis accountable, providing meaningful relief for homeowners commensurate with the scale of the misconduct, and getting our economy moving again.

The American people deserve a robust and comprehensive investigation into the global financial meltdown to ensure nothing like it ever happens again, and today’s announcement is a major step in the right direction.

This move opens up access to a variety of federal resources, at a larger scale available than in the New York Attorney General’s office. Schneiderman already had a deal with the Inspector General of the FHFA on information-sharing, but it was more limited. It also opens up other relevant jurisdictions that Schneiderman can pursue.

But that assumes Schneiderman can get the buy-in he needs from co-chairs that seem committed to protecting the banks from harm. As Abigail Field writes, the deck looks stacked against Schneiderman if the goal is to reach consensus on prosecutions. And that could mean that the long-view goal here was not to prolong investigations and delay the settlement, as Felix Salmon believes, but precisely the opposite (though I do think Felix makes good points in that post, particularly about how this endless process has mainly delayed needed principal reductions).

As one observer close to an AG told me last night, “I don’t know how Eric Schneiderman gets a wave and a wink from the President of the United States in the State of the Union address without standing behind the Administration’s agreement.” Indeed. That upsets the entire balance of power with respect to the settlement. If Schneiderman joins, it undermines the group of “Justice Democrat” AGs who were working on how to deal with investigations in the absence of a settlement. AG offices are freaking out about this, and it will be tough to keep them from acquiescing now. After all, they have a fig leaf of this new new investigation.

More important, this announcement has collapsed the unified wall of objection on the left to a settlement. And I mean COLLAPSED. Just a day ago, activists were getting in the face of their AGs, warning them of the dangers of a weak settlement that provides little in the way of relief to homeowners. Now I have dozens of press releases in my inbox from liberal groups offering huzzahs to the President for this wonderful investigatory panel.

Bob Borosage of CAF: “After months of troubling rumors that the White House was urging state attorneys generals to hold banks blameless – and after months of protests by concerned Americans – the President is doing the right thing by announcing an investigation of the big banks.”

Justin Ruben, MoveOn.org: “This is a huge deal for the American people and the biggest victory yet for the 99%.”

The New Bottom Line (who I expected a bit more from): “We congratulate (Obama) for making the smart move of naming New York Attorney General Eric Schneiderman to co-chair the task force that will lead a full investigation of the role of Wall Street in the financial collapse and the mortgage crisis.”

Peggy Mears of the Alliance of Californians for Community Empowerment: “This decision is good news for the millions of homeowners whose lives have been turned upside down by the reckless conduct of Wall Street.”

Dan Cantor of the New York Working Families Party: “Americans should welcome the announcement by President Obama that the rule of law applies to every American, no matter how wealthy or powerful.”

The Campaign for a Fair Settlement: “The President faced significant pressure from Wall Street CEOs to let the banks off the hook. By creating the mortgage crisis unit, President Obama showed real leadership – and proved that his top priority is fixing the economy for working Americans.”

Rich Trumka of the AFL-CIO: “Recognizing the need for accountability the President powerfully insisted on a more humble Wall Street subject to a thorough investigation of the misconduct in the mortgage markets that wrecked our economy by the full range of federal and state civil and criminal authorities.”

I don’t have a clue what these groups are talking about. And to be clear, I didn’t understand all the focus on having the President “announce an investigation” in the first place. That was the coordinated language of practically every call to action I’ve seen in the last week. If I didn’t know better, I’d think that they had this guarantee in hand from the White House, so they could push out to their lists with the “big victory” they received.

Only this isn’t a victory at all, at least not yet. Schneiderman may be trying to work from within, but he’s saddled with a panel full of co-chairs tied to banks with a history of obstructing accountability. The united front of Justice Democrats has been nicked. Kamala Harris, facing enormous pressure to go along with the settlement (she remains opposed at this point), now must contend with being the main big-state holdout AND having a family member co-chairing the investigation panel!

This is a classic Obama move, putting a threat or a rival inside the tent. It happened with Elizabeth Warren and David Petraeus and Jon Huntsman, and it’s happening again. It divides the coalition against a weak settlement, which will at the least shut down state and federal prosecutions on foreclosure fraud and servicing issues. It puts hopes in yet another investigation, one with little chance for success.

Put it another way: one thing that would convince me that this committee was serious was if the settlement pact was put on hold until the investigation were completed. The fact that the settlement push is in high gear is yet more proof that this committee is yet another bit of regulatory/enforcement theater, just like the Foreclosure Task Force, or the servicer consent decrees (confirmed as an embarrassment via the use of badly conflicted “consultants”), or the current OCC investigation into foreclosure abuses, which excludes all sorts of injuries inflicted upon homeowners, most notably servicer fees abuses and misapplication of payments.

I’d really like to be wrong about this. But this just reads like a gambit, a fix, a charade.