Big public pensions are now jumping into the foreclosure fray. The trustees for New York City's government pension funds have asked the boards of Citigroup, Wells, JPMorgan Chase, and Bank of America to crack down on shoddy foreclosure practices. The NYC retirement system owns about $1.77 billion worth of stock in the top banks and is understandably worried that its investment will take a hit due to botched foreclosures and potential bond putbacks.

The trustees of the pensions have filed a shareholder resolution calling for the banks' boards to perform independent audits of internal controls over the foreclosure process and report the results by Sept. 30, notes the AP. This is something that I would expect most banks are doing already. Most banks seem pretty confident that they are in position to quickly fix problematic cases. But their confidence will not be easily translated into court approval in the 23 judicial foreclosure states.

We'll just have to see how the courts view all this. But it does appear that shareholders will be willing to make this an issue at annual meetings next year. I doubt we'll see a lot of carnage at the director level--especially with proxy access rules on hold--but we could get a lot of rhetorical fireworks and even some protests.

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