Aweek ago Tuesday, seven hours before President Obama began delivering his State of the Union address, the White House released the names of the people who’d be sitting that night in the first lady’s box. Besides Michelle Obama, there were 23 people on the list. But when the president began to speak, a 24th guest, whose name hadn’t been on the list, was also seated in the box: New York Attorney General Eric Schneiderman. And therein lies a tale.

Schneiderman’s appearance was the visual accompaniment to the president’s State of the Union announcement that he would pursue a large-scale civil and criminal investigation of the banks, mortgage vendors, securities bundlers and other financial actors who inflated the last decade’s housing bubble and nearly blew up the economy when it burst. The announcement signaled a clear shift in the president’s position. And the fact that New York’s attorney general had not been on the guest list as late as 1:30 that afternoon suggests that the administration’s negotiations with Schneiderman, who has been the leading proponent of what he calls “a full inquiry into the financial irregularities and misconduct that brought down the American economy,” went down to the wire.

Elected attorney general in November 2010, Schneiderman discovered upon taking office that the Obama administration was avidly promoting a proposed settlement among five mega-lenders — Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and Ally Financial — and the 50 state attorneys general and the federal government. In return for the banks coughing up $25 billion in payments and mortgage relief to present and former homeowners, as compensation for robo-signing abuses during the banks’ foreclosure frenzy from 2008 to 2011, the feds and the state AGs would grant the banks immunity for not just any further robo-signing misdeeds but for all illegal conduct that had led to the 2008 collapse. Misrepresenting the terms of mortgages to buyers, pushing mortgages on people who lacked the wherewithal to pay them, packaging the dubious mortgages into securities that were anything but secure and selling them to unsuspecting investors — the banks would be free and clear of any state or federal prosecution for these offenses. Indeed, with no agency of government able to bring legal action, there would be no serious investigation of whether and how the banks broke the law.

When Schneiderman learned of the proposed settlement, he said no. He was not willing to let the banks walk, uninvestigated. Not only did he refuse to endorse the deal, he formed a team of 15 attorneys to look into possible financial fraud. Without the signature of the attorney general from the state that’s home to Wall Street, there was no deal. And over the course of 2011, Schneiderman convinced attorneys general from other key states, as well as community organizations and unions, to join him in demanding a different deal — one that explicitly does not hold the banks harmless for illegalities in the run-up to the crisis, and that commits the federal government to employ its considerable resources to running down those illegalities.

For three years, the Obama administration had not wished to pursue such a course. Treasury Secretary Tim Geithner did not want to subject Wall Street to this kind of poking around through its records, much less to prosecutions that could compel major banks to be restructured. But over the past year, as Schneiderman hung tough, the political winds shifted. Thanks in part to Occupy Wall Street, the fundamental fairness of the U.S. economy became a leading public concern — a concern to which Obama has now responded with his emphasis on rewriting the tax code and investigating American finance.

With just 15 lawyers at his disposal, Schneiderman couldn’t have waged a far-reaching investigation anyway. He’s now secured commitments of much greater resources from the Justice Department, the FBI, the Internal Revenue Service, the Securities and Exchange Commission, the new Consumer Financial Protection Bureau, and various U.S. attorneys and other state attorneys general. There will be several hundred investigators, as well as state and federal statutes under which alleged lawbreakers can be charged. All of this means that the government will be able to commit resources comparable to those that a mega-bank can bring to its defense.

“We have to get accountability,” Schneiderman told me this week. “We have to get substantial relief for homeowners and investors. And we have to get the story told clearly and factually, so the history doesn’t get rewritten. If you listen to the presidential debates, you hear the same supply-side and deregulatory nonsense that got us into this crisis. If we don’t uncover the facts and put them out there, it will happen again.”