Calling the proposed deal "inadequate for California", Harris has rejected the proposed 50-state settlement on mortgage fraud.
According to Barron's
California has pulled out of negotiations with banks to come to a settlement over robo-signing and other foreclosure practices, possibly derailing attempts by banks and the Obama administration to come to a deal worth about $25 billion to the states. California AG Kamala Harris called the proposed deal "inadequate for California homeowners."
The news could hit big banks hard, as the longer they take to dispose of large potential liabilities, the more investors have questioned value of their stocks.
According to Forbes:
In a letter sent Friday to Associate U.S. Attorney General Thomas Perrelli and Iowa Attorney General Tom Miller, who have been leading the negotiations, Ms. Harris said her decision to break off from the group was driven by two key concerns. "It became clear to me that California was being asked for a broader release of claims than we can accept and to excuse conduct that has not been adequately investigated," she said.
Harris's decision to break from the probe comes somewhat as a surprise since it was her counterpart in New York, Eric Schneiderman, whose been making threats to break from any agreement that didn’t allow him to pursue claims against banks on his own.
New York's Attorney General, Eric Schneiderman, has been threatening to do the same, but has not yet taken such a dramatic move.
The Courage Campaign and other groups have been leading the fight to get the Attorney General to withdraw from the settlement, and now they they have succeeded. Here's excerpts from their email blast I just received:
If you're disgusted with the big banks, this is the best email you will read in a long time.
Breaking news! Kamala Harris, California's Attorney General, has rejected the bogus 50 state settlement pushed by the big banks. Without California, the entire effort to lure the 50 Attorneys General into signing a "get out of jail FREE" card is crumbling.
For the first time, we've got the banks on the run. They're terrified. We can finally extract justice on them for bankrupting our country!
How did this happen? We showed Kamala Harris that we would support her if she did the right thing. Nearly 10,000 Courage Campaign members signed our petition, and the momentum is on our side.
California has 10% of the nation's population and was devastated by the foreclosure crisis. These fat cat bankers are not going to get off scot-free if we don't let them...
1. A reduction on principal balances on all underwater mortgages to help stabilize our state economy and create more than 300,000 jobs in California
2. Limited immunity so banks are not off the hook from wrongdoing or future investigations
3. A monetary penalty that is commensurate with the harm caused by the banks: far past the bank-proposed $20 billion to be shared nationwide.
Coupled with the continued growth of #OccupyWallStreet, we might actually be seeing the first steps taken that will cause the big banks and those in positions of authority therein to take real responsibility for their actions in causing the Great Recession.
3:03 PM PT: A bit of background from Businessweek
All 50 state attorneys general last year announced they were investigating bank foreclosure procedures following complaints that the companies were using faulty documents in seizing homes.
State attorneys general and federal agencies have been negotiating a settlement with the five largest mortgage servicers, including Bank of America Corp. and JPMorgan Chase & Co. They have sought a settlement that would fund loan modifications and set requirements for how the banks conduct foreclosures and interact with borrowers.
9:18 PM PT: You can send a thank you note to Harris here