Taking a Closer Look at Kamala Harris' Role in the Mortgage Settlement
Was the settlement a good deal for distressed homeowners? And how important was Harris, the former district attorney of San Francisco, in forcing the Obama administration to abandon an earlier deal that was even more favorable to financial institutions?
Pulitzer Prize-winning Los Angeles Times business columnist Michael Hiltzik wrote an excellent analysis of the settlement over the weekend that goes a long way toward answering both questions. Hiltzik asserts that the settlement is nothing for Harris or anybody else to be proud of. He suggests that despite the "rosy parade of self-congratulation" attending the deal, it was less of a boon for homeowners than for the banks and for President Obama and Harris, who benefited from it politically.
Hiltzik first dissects the $26 billion settlement figure being tossed around:
The only cold cash the banks are paying is a combined $5 billion, including $1.5 billion to compensate borrowers whose homes were foreclosed on from 2008 through the end of last year, with the rest going to the federal and state governments to pay for regulatory programs.He continues,
Most of the balance is in mortgage relief for stressed or underwater mortgage holders, including principal reductions, refinancings and other modifications.
How much of this will translate into an outlay of cash by the five banks? Not much, if any.
The provisions mostly require mortgage lenders and servicers to comply with what I would have thought was already the law, which prohibits, you know, criminal fraud...
What the standards do accomplish is to expose how sad our enforcement of the law has been up to now, and how hard it will be to enforce it in the future if this is the best we can do in the face of manifestly illegal behavior. The lesson is: Break the law, and the full weight of the state and federal governments will come down on your head to make you agree not to break the law -- in the future.
A New York Times story that appeared yesterday casts further light on Harris' role in the settlement negotiations. The article at times falls into what has often been an unsettling trend among reporters of cowing to Harris' star power. For instance, we learn from the Times that our attorney general is has an "aura of glamour" and a "penchant for Manolo Blahnik shoes" -- oh, and that she is "a woman who is no stranger to winning."
But it also gives some space to liberal groups' dissatisfaction with what unnamed sources told the Times was her lack of stomach for the fight with big banks:
"It seemed from the outside perspective like it took a lot of work to get her where we needed her to be," said one person who was involved in the groups' campaign but spoke on condition of anonymity to preserve future relations with the attorney general. Leaving the table "was a political decision" for Ms. Harris, he said. "It wasn't like she was some hard-charging A.G. that wanted to take on the banks."
Charges that Harris is essentially a political animal are not new, but this is the first time those instincts have held sway on a national stage. Whether Californians will benefit or not remains to be seen.
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