California Attorney General Kamala Harris sent a letter to state and federal regulators explaining that she pulled out because the proposed settlement amount for banks guilty of bad securitization practices leading up to the mortgage crisis – said to be in the $20 billion range – was too small.
I’m convinced that the deal will eventually go through, however, after some further concessions are made. Certainly the absence of both New York (whose Attorney General Eric Schneiderman gamely started this mess by refusing to sign on or abandon his own investigation into corrupt securitization practices) and California will make it difficult for the banks to do any kind of a deal. But there is such an awesome amount of political will to get this deal done in Washington that it almost has to happen before the presidential election season really gets going.
If it does get done, expect a great deal of public debate over whether or not the size of the settlement was sufficient. Did the banks pay enough? Should they have paid ten billion more? Twenty? Even I engaged in a little bit of that some weeks ago.
But if and when that debate takes place, it will actually obscure the real issue, because this settlement is not about getting money from the banks. The deal being contemplated is actually the opposite: a giant bailout.
In fact, any federal foreclosure settlement along the lines of what’s been proposed will amount to a last round of post-2008-crisis bailouts. I talked to one foreclosure activist over the weekend who put it this way: “[The AG settlement] will be a bigger bailout than TARP.”
Another bailout. More giveaways to the 1%. Nothing fair to the 99%. And media keeps asking what is the point of OWS? Open your eyes, stupid people!