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California’s Harris Seeks Edge In U.S. Foreclosure Standoff

Publication Date: 
January 31, 2012
Source: 
Business Week - Bloomberg
Author: 
Joel Rosenblatt

Professor Kenneth E. Scott corresponded with Joel Rosenblatt of Business Week - Bloomberg to discuss California Attorney General Kamala Harris' reluctance to move forward with a proposed agreement on foreclosure practices.

California Attorney General Kamala Harris’s holdout position in a proposed agreement with banks over foreclosure practices may reap financial and political rewards at the cost of prolonging some constituents’ suffering.

Her strategy has created an obstacle in the negotiations between state attorneys general and the five largest U.S. mortgage servicers over a nationwide probe. By Harris’s own reckoning, her reluctance to sign onto a deal and any investigation she might pursue risk deepening the “blight and despair” for many of the 2.2 million California homeowners whom she has said are “holding on by their fingernails.”

...

Ken Scott, a professor at Stanford Law School, said in a phone interview that Harris may be “maneuvering to get a bigger cut of any pot of gold -- and that’s a game she’s playing against the other attorneys general rather than the banks.”

“If the banks need her to be in the settling group then the other AGs would be willing to pay a price to keep her in it,” Scott said. “That could be a tactic to up the percentage of the total take.”

Negotiators of the multistate settlement are “looking at it like lawyers paying attention to the legal position of their client, and whether there’s a prospect of liability,” Scott said. “That may not be the way Kamala Harris is looking at it - - she can get political mileage out of an investigation whether or not it leads to successful litigation.”