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For sale signs are posted on a foreclosed house on September 15, 2011 in Glendale, California. Foreclosures spiked as mortgage default notices filed by banks climbed 33 percent between July and August, the biggest single-month increase in four years.
President Obama has been pressuring the attorneys general to sign off on a deal that would allow banks accused of wrongdoing in the foreclosure crisis to free themselves from further liability with a one-time payment to the states. All 50 attorneys general, or “AG’s” have been negotiating a settlement over the past year with major banks accused of wrongful foreclosures and practices such as robo-signing, the practice of lenders signing mortgage documents without sufficient review of borrowers’ credit or ability to pay back the loans. Several AGs have already spoken out against President Obama’s proposed deal, announcing their reservations at letting banks off the hook so easily. It remains to be seen whether California’s Attorney General Kamala Harris will join their ranks.
Harris subpoenaed CitiGroup in August, was in closed-door meetings with several banks on Friday and is expected to make an announcement sometime this week about how she’ll proceed. Opponents of continuing an investigation would like to see a settlement, arguing it will stabilize the housing market and free up credit for more lending. On the other side, President Obama is being criticized from the left for not aggressively going after these banks. What’s best for the country, the economy, and how will this play out for President Obama politically?