Yves Smith reminded me of something I wrote last March, when I was hilariously writing about a “rushed” foreclosure fraud settlement.
The master settlement agreement with the tobacco industry in 1998 eventually got the agreement of 46 AGs, with the other four coming aboard later. That would be similar to the necessary outcome here; to become the official position of the National Association of Attorneys General, at least 38-41 of the AGs would have to sign on. And even that has no binding force to supersede state law.
It looks like we’ve already gone below that threshold, according to new reporting from Loren Berlin. A group of approximately 14 AGs met in Washington to set an alternative course to the settlement, the talks of which have consistently missed deadlines and failed to move forward. Leading those talks are the Justice Democrats who have been critical of the settlement and who have worked on their own investigations and lawsuits in their states.
The participating attorneys general, from states including California, Nevada, Delaware, Massachusetts and New York, discussed how they could possibly join together to investigate and potentially file lawsuits against abusive mortgage lenders and servicers. Principals or representatives also attended from Hawaii, New Hampshire, Missouri, Mississippi, Maryland, Kentucky, Minnesota, Oregon and Montana.
“This past Tuesday, a group of like-minded Attorneys General met in D.C. to discuss ongoing and future investigations into the mortgage finance and foreclosure industries,” said Delaware Deputy Attorney General Ian McConnel.
“The talks weren’t just about investigations,” said a source with knowledge of the discussions. “They were also about the attorneys general offices feeling uninvolved in a process by which their federal colleagues have been negotiating on their behalf.”
This is a total mutiny from Tom Miller’s sideshow, which increasingly has been run by the Obama Administration and not the AGs. That sideshow has been falling apart; just yesterday we learned that the main Administration point person for the settlement, Thomas Perrelli, plans to step down in March.
These discussions are not taking place with the participation of the mortgage servicers. In other words, they are not negotiations. They are strategy sessions. They involve the AGs which have been the most aggressive in holding the banks accountable – Martha Coakley, Catherine Cortez Masto, Beau Biden, Eric Schneiderman, Kamala Harris – and a group of others (so far, all Democrats, though there are rumors that the Republican AG from Colorado may be involved) who want to benefit from their wisdom as they consider their own investigations. And that’s the right move. The banks will never provide a good deal as long as nobody actually investigates them to determine the depth of the fraud. The banks have all the leverage with a desperate coalition led by the Administration and Tom Miller. With a Schneiderman/Biden/Coakley coalition, the law enforcement officials have the leverage.
So if these 14 AGs bolt from the Miller-led settlement talks, you’re down to 36 AGs. And that’s only from one side of this. There are wingnut AGs like Ken Cuccinelli and others who will not abide by the banks having to pay a cent in penalties. Yves notes that four of these Republican AGs wrote a letter to that effect back in April. Because the talks were collapsing from the left, the revolt on the right was largely ignored. But if Miller does ever get it together, he will have to contend with them as well. And remember, a settlement would be perceived as a win for the Obama Administration, and we’re in an election year. I’d be surprised if more than a handful of Republican AGs, most of whom are political animals with designs on higher office, participate in such a spectacle.
Which means that the Miller-led settlement talks, as I’ve been saying for a while, probably don’t even have a MAJORITY of AGs at this point.
The fact that Schneiderman found $1 million in his budget to support foreclosure legal aid suggests that he is not preparing for a world with a settlement. He’s preparing for a fight. And more and more AGs are joining him. The vaunted “settlement” has become irrelevant.