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By Matt Stoller, the former Senior Policy Advisor to Rep. Alan Grayson and a fellow at the Roosevelt Institute. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller.
California Attorney General Kamala Harris is one of the key players involved in the 50 state negotiations. The state was the seat of a good proportion of mortgage fraud nationally, and the California Attorney General’s office is one of the only state AG offices with enough legal resources to impact the national housing framework. Understanding how she thinks about politics matters, because this is how critical decisions are made. Harris’s decision-making seems to be driven by personal connections and fundraising networks. This is not at all unusual, but it does contrast a bit with other types of public servants, who often see their job as serving the law itself. So what do her personal connections and fundraising networks look like?
Well, largely she shares them with President Obama, who endorsed her late in 2010 for the AG office. Her brother-in-law, Tony West, was key fundraiser for Obama in California, having helped raise $65 million for Obama in the state, and he is considered a rising star in the Democratic Party. He now works at the DOJ and has expanded the Civil Rights department to take on some elements of mortgage fraud. The DOJ has an internal directive to make mortgage fraud a top priority, but what mortgage fraud means to the DOJ are mortgage modification scams and penny ante borrowers ripping off fly-by-night lenders. West, while not the direct actor in the DOJ’s settlement talks, is in all likelihood involved in pressure on state AGs to sign on to a settlement. And it’s simply inconceivable he hasn’t dealt with his sister-in-law and political ally on the matter. Harris and West are part of a coherent political network, and much of the strength of that network has to do with reinforcing the traditional bank-friendly policies of the Democratic elite and then using that to create political support.
The first indication that as California AG Harris was more sympathetic to the Obama side of the ledger on banking is that one of her first decisions as AG was to let off Angelo Mozilo without admitting to wrong-doing or personally paying a fine (the small money that went to restitution came from Bank of America shareholders). I suspect the issue is actually more personal to her than legal, not because she particularly cares about finance or foreclosures, but because her friends and allies are very concerned about ensuring that the banks get a release. In their view, this will cause the housing market to clear, the economy to recover, and then help reelection chances.
The political problem for Harris is that she was elected by liberal votes, and she’s getting enormous public pressure to resist signing on to a settlement that is perceived as favorable to the banks. While she backed out of an immediate settlement a few weeks ago, she refused to join the joint investigation by Eric Schneiderman and Beau Biden of the foreclosure fraud crisis. She has sat on the sidelines, trying to figure out what to do.
I pinged a savvy Bay Area political operative, and asked about Harris’s reputation. Here’s the response.
Kamala Harris is no Eric Schneiderman. What most people outside of San Francisco don’t know, is that she’s not a true progressive but rather a hack Democratic politician who plays to progressive audiences when it benefits her agenda.
When Kamala Harris got her start in big time San Francisco politics she was best known as the ex-girlfriend of Willie Brown. Willie Brown is a powerful figure in Calfiornia politics, having been longtime speaker of the state assembly until he was term limited out. At that point he ran for mayor of San Francisco and served two terms which were distinguished by corruption and personal patronage. For example, as mayor he increased the budget for “special assistants” from $15 million to $45 million and put a bunch of his friends on the payroll.
Harris dumped Brown shortly after he became mayor but he provided key help to her campaign for District Attorney in 2003. It was a tough race against a two-term incumbent. In that race she agreed to participate in a system that mandated campaign finance limits. In the last days of the race when it was clear she had a shot at winning, she ignored the mandated spending limits she had previously agreed to assuming that the fines would be well worth the expense of spending extra money in the home stretch if she won. And she did win. Her career as San Francisco’s District Attorney was marred by massive mismanagement of the city’s crime lab which was under her jurisdiction. As a result, hundreds of criminal cases had to be thrown out of court.
Though lifted up as a Netroots darling in her run for California AG in 2010, she’s really a classic Democratic party hack, though of the California variety which makes her better on issues like gay marriage and the death penalty than the average Dem. For example, she let the mortgage mauraders at Countrywide and its CEO Angelo Mozilo off the hook in February of 2011 when he paid a mere $6.5 million to get out of a predatory lending lawsuit filed by the state of California. [Actually he didn't, Bank of America paid it for him]
She has done some good things. She is fighing back against anti-gay marriage forces. And she joined the DOJ in opposing the AT&T takeover of T-Mobile. Under immense public pressure she pulled out of the 50-state settlement at the end of September. But now under tremendous pressure from the White House she may walk back her earlier promise to investigate the banks. This is not surprising. It’s worth noting that Harris won the Attorney General race in 2010 with the smallest margin of all statewide elected offices. She won by less than half a percent or 55,000 votes.
While we can’t count on Harris to do the right thing because she is a committed progressive, we can count on her to make the decision that she believes gives her career the most benefit (or conversely causes her the least pain). This means the pressure from voters who barely put her in office when Democrats like Jerry Brown and Barbara Boxer won by comfortable margins can possibly be a counterpoint to promises from the Wall Street banks and Obama Administration officials. Our only hope is massive pushback from voters.
I suspect that if she signs on to a settlement, it will ultimately damage her own political prospects among a certain slice of the electorate, and forever brand her as one of the 1%. But it could bring short-term political benefits, perhaps in the form of a potential cabinet role in a second Obama administration or solidified positioning as a bank-friendly candidate in a future Senatorial or Gubernatorial run. California is an expensive state for politics. In many ways, making the wrong decision will turn her into a relatively unpopular figure with unlimited resources. It’s not an easy choice, but politics isn’t simple.
That said, Harris is just one player in this saga, though obviously California is an important state. Regardless of what she decides, problems of foreclosures and fraud will continue, led by a raft of private suits, investigations by New York and Delaware, and least-noticed but very significantly, a very tough AG in hard hit Nevada, Catherine Cortez Masto, who has at her disposal legal powers that end foreclosure fraud. And of course the story of the housing crisis doesn’t start and end with the settlement, it will continue because of fundamentals. Policy, though, does matter, and because of that, politics matters. And without endorsing any set policy or political action, this is how the politics look.