After years of going nowhere, the investigation of the Wall Street securitization machine behind the financial crisis is finally showing some promise, with probes in New York and California ramping up and even the federales getting into the act. The Department of Justice preparing to hit Goldman Sachs with subpoenas, The Wall Street Journal reported on Friday.

The Journal reports today that New York Attorney General Eric Schneiderman is subpoenaing bond insurers to get information on the toxic assets Wall Street sold to them.

The subpoenas are the latest sign of how state and federal officials are stepping up their scrutiny of the mortgage machine. Federal prosecutors, for instance, are using tools such as the Civil War-era False Claims Act in an effort to recoup government losses on soured mortgage loans. The tools available to Mr. Schneiderman include the state’s Martin Act, which doesn’t require prosecutors to prove intent to defraud. The Martin Act has been used by Mr. Schneiderman’s predecessors to address a variety of alleged misconduct by Wall Street.

Bond insurers have argued they were deceived by banks about the quality of the loans they guaranteed. They have pushed banks to repurchase troubled mortgages and gone to court when that effort has failed.

MBIA, for instance, has filed eight mortgage-related lawsuits, most involving guarantees on home-equity loans and lines of credit that were packaged into bonds. These lawsuits generally allege the banks breached contracts and committed fraud by including loans in the bond deals that didn’t conform with guidelines outlined in documentation related to the deals. In some cases, “as many as 90% of the loans reviewed didn’t conform with underwriting guidelines,” an MBIA spokesman said.

This is particularly interesting (emphasis mine):

Mr. Schneiderman’s office has asked the bond insurers for information regarding claims paid to bond investors and about litigation and settlements the insurers have entered into with banks that packaged loans into securities, these people said.

It’ll be funny if it turns out the banks thought they could pay to make these problems go away and they end up in legal trouble anyway.

— The WSJ, in the story above, and the Los Angeles Times report that California Attorney General Kamala Harris is forming a mortgage fraud task force to prosecute crimes from up and down the mortgage fraud chain—from Wall Street on down.

The LAT on what it will be looking for:

•Corporate fraud, including instances in which bundled mortgages were sold as securities to the state or its pension funds under false pretenses. Harris said her office plans to prosecute some cases under California’s False Claims Act, which she described as “one of those very powerful tools that California uniquely has … to pursue, in essence, what are false claims that are submitted to the state.”

•Scams, including instances in which consultants, lawyers and others took fees from people in foreclosure, saying they would help the homeowners get loan modifications or other remedies, but delivered nothing.

•Fraudulent lending practices, including deceptive marketing, failure to fully disclose loan terms and qualifying people for loans who couldn’t afford the terms.

The HUD inspector general recently found that the biggest mortgage servicers defrauded taxpayers and violated the federal False Claims Act.

Yves Smith says this is “further proof that attorneys general are abandoning the 50 state attorneys general investigation” and that “The fact that the AGs from two major states have effectively left the talks confirm what we have said all along: that the negotiations were not serious precisely because no investigations had been conducted.”

— Finally Bloomberg reports that Schneiderman has expanded his probe to include press favorite Jamie Dimon’s JPMorgan Chase, as well as Euro giants UBS and Deutsche Bank.

Add them to a burgeoning list that already includes taxpayer bailout recipients Goldman, Morgan Stanley, and Bank of America, and we have us quite the little group.

Salon’s Glenn Greenwald says recent moves show that Scheiderman may be the real deal:

An Attorney General who simultaneously works for more lenient laws for ordinary Americans committing trivial drug offenses while demanding serious accountability for the nation’s most powerful factions is a rare and noble aberration indeed: one who seems openly hostile to the two-tiered justice system that operates to protect lawbreaking political and financial elites while punishing the powerless. Of course, the last politician who tried to impose meaningful accountability on Wall Street was New York Attorney General and Governor Eliot Spitzer, whose career was abruptly destroyed by a still-very-strange-and-difficult-to-understand massive federal law enforcement effort into his prostitution-hiring activities. As Jay Ackroyd said of Schneiderman yesterday in response to my praise of his actions: “He’d best have no skeletons. None.”

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.