California Attorney General Kamala Harris announces a Mortgage Fraud Strike Force in Los Angeles.
At last, after 16 months, we have a mortgage settlement between five major banks and the states’ attorneys general. But while it seems like a big number, $26 billion is, relatively, not very much. For perspective, the government spent around $50 billion bailing out General Motors, and close to a trillion bailing out the banks, and the tobacco industry settled for $250 billion in the late 1990s. California still walks away with a majority of that sum - $18 million, but is it enough? Consumer advocates warn of future fraud and say the settlement, which would result in checks of up to $2000 for people who lost their homes, is insufficient. On the other side, critics who had supported the settlement, arguing it was in the economy’s best interest to settle future lawsuits, are displeased that the final deal preserves loopholes for California Attorney General Kamala Harris to pursue independent litigation against banks under the California False Claims Act.
Is there consensus that the deal was necessary, but on multiple levels, insufficient? What do you think of the deal?
Kamala Harris, attorney general, California
Lisa Sitkin, managing attorney, Housing and Economic Rights Advocates,
a California not-for-profit legal service and advocacy organization
Ted Frank, adjunct fellow with the Manhattan Institute’s Center for Legal Policy and editor of the Institute’s award-winning web magazine, PointofLaw.com