When the player with the most skin in the game makes a bet, it's worth taking notice. California Attorney General Kamala Harris made her play when she walked out last week from the 11-month-long settlement negotiations between the 50 state attorneys general and the major U.S. banks. And now, Massachusetts Attorney General Martha Coakley says that she also doesn't think a fair settlement over foreclosure abuses can be reached and she's moving forward with lawsuits relating to unlawful foreclosures.
This may go down in history as the Kamala Harris (pictured at left) tidal wave.
Harris, who represents the largest and one of the hardest-hit states in the foreclosure crisis, deemed the settlement being worked out with the banks as too little, too late for the nation's foreclosure victims. And for that alone, I'd like to nominate her for president.
By saying that 1.2 million foreclosed-upon Californians have been pillaged and driven from their homes by the masked marauders, and that the proposed settlement deal on the table lets the captured bandits off the hook too easily, she raised a voice for homeowners that hasn't previously been heard.
Her pronouncement may not have been the first to undermine the resolution but, given the size of her state, this came through a bullhorn, whereas others were just whispering.
Harris flat-out said that the pending deal is "inadequate for California homeowners" and would give the banks too much legal immunity. And she put on her boxing gloves. She pledged to continue her own investigation into what the banks did and who they did it to. Her office's Mortgage Fraud Strike Force will investigate foreclosure practices -- which could lead to civil or criminal filings against lenders -- and she's also going to look at possible fraud at the loan origination stage too. Let's pause for a collective fist-bump right here and now.
Should lenders start shaking in their boots at the prospect of the many foreclosure fraud class-action suits that they will no doubt be seeing -- maybe even dethroning the tobacco industry as the greatest employment act for lawyers -- the word is that Harris would be happy to meet with the banks to iron out a separate settlement agreement on behalf of Californians. But lenders should be forewarned: Harris says that any deal cut has to include loan principal reductions and lowered interest rates. What's not to love about this woman?
Community activists are in her corner too. A press release from the group, People Improving Communities Through Organizing, noted that this settlement would have helped only about 20,000 of California's 2.2 million underwater homeowners -- and given away the right to pursue investigations and sue lenders for fraud.
"The first step in restarting our economy is keeping people in their houses and holding banks' feet to the fire," Rick Jacobs, chairman and founder of the Courage Campaign, said in a written statement.
One of the biggest sticking points in settlement talks has been how much in penalties the lenders should pay for their role in improper foreclosures. Federal and state officials wanted more than $20 billion; banks think $5 billion is fair. Beyond that, there was disagreement on the formula for distributing the money.
The settlement would also have established a new set of rules and regulations for the industry. Since when did it become OK to invite the fox into the henhouse to see how best to manage night security?
For the record, some other states have already taken action on their own. Attorneys general in Arizona and Nevada are suing Bank of America for misleading homeowners who tried to modify their mortgages.
But by just walking away, Harris ups the ante. Are we finally seeing a politician ready to take on the banks? You go, girl.
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