One of the big claims by defenders of the foreclosure fraud settlement is that it’s just a down payment on future actions. The release was narrow enough that state and federal regulators can still hold the banks accountable for their crimes. Why, even some active lawsuits were carved out to allow state AGs to pursue claims. One of the biggest was the suit by Eric Schneiderman against MERS and three banks who used the electronic registry. At the time I was unclear how you could let this suit, which alleged that the banks’ deceptive use of MERS led to the creation of false documents, and still release the banks on foreclosure fraud claims. I was assured that the suit was a carve-out, and that Schneiderman could add other banks to the suit for using MERS if they wanted.

Well, so much for that. Schneiderman settled the MERS suit with the three banks and two others, for, get this, a measly $25 million. And look, the Delaware and Massachusetts suits against MERS were folded into it as well.

Five of the nation’s biggest banks have agreed to pay New York a total of $25 million to settle claims by New York State Attorney General Eric Schneiderman regarding their use of a private national mortgage electronic system.

The agreement, filed in federal court Tuesday, resolves certain monetary claims by the New York attorney general against Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co.

The agreement preserves the New York attorney general’s right to sue for damages suffered by consumers and to push for procedural changes. In agreeing to the settlement, the banks neither admitted nor denied guilt.

The New York settlement was one of five side deals struck by the banks with individual states. Delaware reached its own agreement regarding the banks’ use of the system, in which the banks agreed to pay a total of $2.5 million to settle certain claims. Massachusetts agreed to dismiss certain claims against the banks that were raised in a broader lawsuit and to cap any monetary relief it would seek from the banks for remaining claims at $2 million a bank.

That almost doesn’t seem worth filing the lawsuit in the first place. Those fines are useless as a deterrent. And New York, as a result, will not seek to undo foreclosures where the banks used MERS in the creation of false documents. Schneiderman inexplicably says he will “aggressively” pursue the remaining claims on the suit, which involve damages by consumers and procedural claims. But those damages don’t extend to giving the house back that was stolen from those consumers.

Check out the litany of AGs talking about lawsuits they stood down on in conjunction with the overall settlement. The AGs of Florida, Delaware, Massachusetts, Washington, Nevada, Arizona and California all gave up something or other in the settlement (although Massachusetts’ MERS claim was a sidelight in a larger suit against banks for initiating illegal foreclosures).

If this is any indication of how tough Schneiderman plans to be on the securitization task force investigating the banks, you might as well disband it. This isn’t indicative of a Sheriff of Wall Street, or even Sheriff Lobo.