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“Justice Democrats” at Work: California Pushes Back Against Settlement with Banks

Photo by Casey Serin on Flickr, via Creative Commons

Despite the announcement at the State of the Union of a task force to investigate predatory lending and other sketchy bank practices, the settlement between the state Attorneys General and the five biggest banks is still on the table. Yes, we were successful in stalling the settlement, but that doesn’t discount the fact a deal is still being worked out, and that a draft has been submitted to the states AG’s for approval.

The deal calls for only $25 billion in assistance, which as we’ve said is a great deal of money until you compare it with U.S. homeowners $700 billion in negative equity. Despite the fanfare, that amount would only help a small percentage of affected homeowners – many Working America members among them.

We don’t think that’s enough. And now, we’re not alone:

Calif. Atty. Gen. Kamala D. Harris’ office has called a proposed $25-billion settlement with the nation’s mortgage industry “inadequate.”

“We’ve reviewed the details of the latest settlement proposal from the banks, and we believe it is inadequate for California,” Shum Preston, a spokesman for Harris, said in a statement. “Our state has been clear about what any multistate settlement must contain: transparency, relief going to the most distressed homeowners and meaningful enforcement that ensures accountability.  At this point, this deal does not suffice for California.”

Kamala Harris, along with Attorneys General Schneiderman (New York), Coakley (Massachusetts), Biden (Delaware), and Cortez Masto (Nevada), have been leading the charge against a weak settlement for months. Harris’ statement is a big deal because California, in addition to being a big state with a great deal of resources, has one of the highest foreclosure rates in the country. We agree with Harris – agreeing to this pittance of a settlement would be an abdication of her duties as California’s chief law enforcer.

If you want a great example of abdicating your duty as law enforcer, take a gander at Florida’s Republican Attorney General Pam Bondi. Bondi, a frequent Fox News guest and ally of the exceedingly unpopular Rick Scott, is also skeptical of a settlement, but not for the same reasons we are. She’s worried about the Big Banks being treated unfairly:

[With] a settlement taking shape last year, Bondi broke ranks with her counterparts and rejected it. That’s because the settlement would have mandated principal reduction—a measure that could help keep more homeowners out of foreclosure, but that would force banks and lenders to take a bigger hit on their balance sheets. “It seems like she’s balancing the interest of businesses with the interest of Floridians when it comes to principal reduction,” state Rep. Darren Soto (D-Orlando) told the Sentinel. “When you’re the AG, you have one interest: Floridians. You’re supposed to be the consumer advocate, first and foremost.”

When you follow the money, you can see one possible reason why Bondi is interested in a slap-on-the-wrist settlement: she’s received campaign contributions from executives and employees of ProVest and Lender Processing Services – two big foreclosure mills.

We’re cheering this move by Kamala Harris, as well as the efforts of her fellow “Justice Democrats” Eric Schneiderman, Martha Coakley, Beau Biden, and Catherine Cortez Masto. Our members have acutely felt the pains of mass foreclosures in their neighborhoods, communities, and families. These AG’s shouldn’t stop fighting until we get a full investigation of foreclosure fraud; something with a strong budget, adequate staff, and the authority to go after the people accountable for kicking millions of Americans out of their home.

As for Pam Bondi, whether her inaction on the foreclosure crisis really is the result of her campaign contributions or mere negligence, it’s just a reminder of why people are so cynical. Owning a home used to be part of the American promise – this is an area where government needs to help, regardless of party.

Tags: California, Florida, foreclosure, foreclosure crisis, foreclosures, Kamala Harris