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Matt Stoller: 50 State Settlement Chatter – $65 Million of Fundraising and the Kamala Harris Network

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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.

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21 comments

  1. Middle Seaman

    Ms. Harris seems even from the East as Democratic hack. She also seems to adhere to Obama’s psychotic support of the banks. California is crucially important to the release (called agreement) of the banks. She doesn’t seem to either understand its value to her stature or she lacks the courage to pick up the glove NY, Delaware and Nevada have picked up.

    If Harris will continue to be tied to Obama’s fortunes, we may she the beginning of her end next year (with the currently almost sure Obama loss).

    Mayor Willie Brown and the SF corruption: I want to point to an old quote from the late mayor of Chicago, Harold Washington: The Italians did it, the Irish did it and the Jews did it. Now when we blacks are in control (of Chicago), we support our people. Everyone takes a turn. This is all Willie did! We all do it!!!

  2. ella

    These companies have broken several of our most cherish laws, laws that assure fact finding by the courts and laws that assure buyers and sellers ownership rights to real property.

    Robo signing affidavits is both perjury and fraud on the court. This is black letter law, pure and simple.

    Creating MERS and failing to record real property transactions at the county level deprives the counties of a valuable source of revenue and destroys the chain of title to real property. Without a chain of title who knows if a seller has ownership of what he is selling. Ownership of real property is one of the fundamentals of capitalism.

    Violating the trust rules by failing to assign the promissory note in a real property transaction once again casts doubt on ownership because the note is always controlling and the party who has the note can demand payment. This also violates standard procedure for securitizing mortgages and selling tranches of bonds. Again putting buyers and sellers at risk because they are trading something that is faulty, perhaps valueless, at a great cost to themselves and capitalism.

    Capitalism is based on private property rights, rights that are defined and enforced by law. Allowing a mortgage deal without penalty for these serious violations establishes a precedent that the law of America does not matter. This is not the message we should be sending. Without law defining our property rights, are we still a great capitalist nation or simply another banana republic that allows the rich and powerful to flaunt the law for their benefit at the determent of the rest of us?

    We are simply being sold out again. They benefit and we pay. In God we Trust, no not hardly… it should be in the Dollar God we Trust for that is how our system functions. To the highest bidder go the spoils.

  3. Stupendous Man - Defender of Liberty, Foe of Tyranny

    Thank you Matt. Your pieces are a welcome addition here.

  4. briansays

    the critique of kamala is spot on
    its all about her advancement and ambition
    as sf da her rep was to plea out cases for guily pleas for lesser/weak sentences
    essentially she is soft on crime which unfortunately isn’t a hot button for her liberal base
    unfortunately also cali is becoming an increasingly safe state for dems where winning the primary statewide is tantamount to election
    she refused to file death penalty charges against a known gangster who brutally executed an sf cop

    she became willies short time girlfriend to help with the black female vote when he was running for mayor since willie’s reputation/personal taste in the ladies in sacto tended to run to white and blonde

    oh and she didn’t dump him
    willie dumped her after he won the mayor’s job and she had served her purpose
    i hear the message was delivered by letter by the late columnist herb caen
    but then herb isn’t talking anymore..

    1. EH

      I’m no fan of Harris and even less of Willie Brown, but you appear to be very emotional about this topic and are overstating your cases about e.g. the (undercover) police officer who got himself killed and the effects of diverting convictions out of the prison system.

      I’m going to call her office today and inquire whether she is going to do whatever Willie tells her should be done, but it doesn’t help to motivate her to do the right thing by misrepresenting her record. There’s plenty to complain about without doing that.

  5. kaj

    Many thanks you for this enlightening piece. I was beginning to wonder what happened to California and Kamala Harris.

  6. Jack

    San Francisco is the political center of progressive California.

    It’s the Singapore of American politics, a wealth washed geographical near island of recent political arrivals who first used the vote bloc of Black sharecroppers who worked in WWII war industries and their descendants who have populated the regions housing projects ever since to maintain power.

    Intellectually bull-ringed by the University of California political science, sociology and economics graduates, the urban Bay Area has seen weird oscillations of politics money and culture. Think Black Panthers, Jim Jones and the origin of the expression
    “Drinking the Kool Aid”.

    Gays are the new vote bloc. Illegals are supposedly the next except for that nuisance citizenship voting requirement. Not to fear, the City Supervisors are pushing for non-citizens to vote in local elections.

    BofA and Wells Fargo were both headquartered in San Francisco. There is an awful lot of corporate and personal money in San Francisco. Its interests will be served through distraction, division and deceit.

    Like weird mushrooms growing off the rotting log of financial capital, Willie Brown, Harris and ex mayor Gavin Newsom are the largest fruiting bodies.

    In liberal progressive California, Ms. Photogenic Harris barely won by the skin of her teeth, against a cloddish guy that looked like a sugar donut with a rope holding up his pants.

    Willie Brown is eating himself round in the cities best restaurants.

    Newsom, rewarded with the Lieutenant Governor’s position,
    is lurking in Marin County north of the city, ready willing and able after a couple of hours and some breath mints, to step in should Jerry Brown die.

    Harris is on really slippery ground.

    This is make or break time for her. She either goes onto bigger and better things
    Think Ed Meese with a skirt– or ends up working in an obscure personal injury law office that advertises on late night TV.

  7. Susan the other

    Political paralysis. It struck the Obama administration. It struck the late-great state of California. The cause is complexity. If it were possible for the state AGs and the banks to sit down and actually tease the rats out of this tangle it would have been done by now. The reason it is not possible is that the banks committed massive fraud, millions of serious felonies in fact. And they actually have the nerve to ask for immunity without offering either contrition or compensation. Appalling really. What’s a bought politician to do?

    1. Jeff

      “The cause is complexity.”

      AKA “diversity” linguistic and tribal divisions
      writ large. But that’s the entire purpose of
      promoting multiculturalism isn’t it?

      You destroy any coherent unified voice of Middle Class
      citizens by replacing it with an series of
      Hyphenated-Americanoids all scrambling fighting
      for their own alleged interests and for a piece
      of the pie left over by the big takers who fund
      the foundations and arts councils and chairs at universities and whose wealth increases without
      anyone ever having the likelihood of fingers
      pointing at them.

      p.s. Didn’t you use to be Susan The Human?

      1. Christophe

        Jeff, you really should invest in a good dictionary. Complexity and diversity have two unique meanings both rich in accreted connotations. First, look them up individually and try to grasp their meanings separately. Then, if you feel you have really succeeded in understanding each of them alone, try to hold hold both definitions in your head at the same time without collapsing them into some indecipherable chaos replete with hyphenated “Hyphenated”s and begging questions.

        I hope the task is not too diverse for you. Or is it complex? So hard to keep those two straight!

  8. Paul Tioxon

    Here is a link from politico today, authored by AGs Schneiderman and Biden. It is hard hitting, defining the issues politically and the criminality, the legal implications of the banking crisis as relates to MERS and mortgage fraud in the origination of the loans.

    http://www.politico.com/news/stories/1111/67702.html

    I would urge NC readers who understand economics, accounting, business, banking, international finance, foreign currency exchange and current account balances of trade to bear with the more astutely orientated to the political dimension of the political-economy. There is a battle between the militant right wing conservatives and the moderate conservatives. And by moderate, I don’t mean just Obama most of the time, I mean a huge amount of an enormous amount of Americans most of the time on most issues. To take a small example, look at Rick Perry and look at John Huntsman. Rick Perry is inbred red neck joke who likes bigot hate rallies with bible cultists masquerading as the politics of concerned citizens. Huntsman family, in particular his father, has donated hundreds of millions to hospitals and universities, most notable, The Wharton School’s Huntsman Hall at the University of Pennsylvania.

    Biden and Schneiderman have a choke hold on the mortgage fraud due to the States of Delaware and NY being the corporate domicile for many of the entities involved, and are governed by state laws that they can effectively invoke as legal standing for making the banking industry pay for criminality. It may have taken a while for all of this to get up and running for the business minded, but this is not business. They have joined forces and have a prosecutorial strategy that they outline which needs public support. That support begins with the intellectual pressure of the NC writers, such as Bill Black, if he is not already involved. But certainly highlighting every move coming from these two AGs in vital now that there is a serious effort to prosecute. And considering the VP’s son is involved should not have to make me draw out a complete picture of what kind of attack this is. I suggest a MERS Death Watch.

    1. Cindy Elmwood

      Nice article, this paragraph near the end summarized it nicely for me:

      “Reforming the servicing of mortgages is crucial. But these servicing abuses did not create the mortgage bubble. Robo-signing did not blow up the U.S. economy. Rather, these are symptoms of a more far-reaching and insidious problem.”

  9. LucyLulu

    MERS leaves such a tangled web in its wake. Often one will find mortgage assignments in land records being made from now defunct entities such as Ameriquest, New Century, or Greenpoint to the current note holder by a vice president of MERS. However once an entity no longer exists, all agency relationships also no longer exist, therefore the MERS assignments of mortgage are invalid. Never mind that every MERS assignment I have seen has been an assignment made by an employee of the assignee, i.e. a lender making an assignment of the mortgage to themselves, which intuitively rings all kinds of alarms in of itself.

  10. indio007

    Technically robo-signing is not perjury. The notarizations are fakes meaning no one was truly under oath.

    The crime being committed is uttering

    UTTER.
    “To utter and publish a forged instrument is to declare and assert directly or indirectly by words or actions that it is good.”

    Fraud upon the court is accurate though.

  11. kabosh

    I’m in SF, and yes, that’s an accurate representation of Kamala Harris. But boy, this post brought out a weird bubbling up of crazy: odd paranoiac tales from the Willie Brown crypt, strange and arbitrary anti-multicultural rants, and some kind of bizarrely twisted alternate-reality version of urban political economy from Jack that resembles fragments of Philip K. Dick’s fictional Bay Area more than anything else. Good stuff!

  12. sandra

    I remember the Kamala Harris election to attorney general much differently.
    I thought she was very popular because people perceived her as progressive (as they had perceived Obama) as well as attractive.
    And I think she started out farther ahead, but she was attacked by opponents who put a lot of money, time and energy into trying to take her down. I thought it was business interests, who feared she was a progressive and preferred her opponent for that reason.
    The scandal about the crime lab was beaten to death by the Chronicle. They ran the same story over and over again.
    One female employee admitted to stealing a little cocaine for her personal use. As if that was the first time drugs disappeared from police custody, the Chronicle must have run that story (and that poor woman’s picture) forty-six times.
    We laughed when we kept seeing it again and again.
    I thought it was about trying to take Kamala Harris down before the election. And it almost worked. That’s why she barely squeaked through. She may be more bank-friendly now, as Obama became after his election.
    But that was not evident about her before.

  13. Jeff

    “One female employee admitted to stealing a little cocaine…”Aww shucks, nothing to it huh?

    “San Francisco Superior Court Judge Anne-Christine Massullo said prosecutors “at the highest levels of the district attorney’s office knew that Madden was not a dependable witness at trial and there were serious concerns regarding the crime lab.” She found that prosecutors had hidden the information and violated defendants’ constitutional rights, but left it up to judges to decide whether to dismiss charges against the defendants.”

    http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/06/06/BAQU1DPF25.DTL&tsp=1

  14. flory

    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

    Ms Harris should keep in mind that relatively unpopular candidates with unlimited resources haven’t done well recently in statewide races in CA — eg Meg Whitman and Carly Fiorina.

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