Kamala's Way Page 13

  Months before Harris was sworn in, state attorneys general, the U.S. Justice Department, and five big lenders—Bank of America, Wells Fargo, JPMorgan Chase, Citigroup, and Ally Financial (formerly GMAC Mortgage)—had been negotiating a settlement over one aspect of the housing crisis. The issue initially involved “robo-signing,” a pernicious practice by which banks foreclosed on homes without verifying the details related to any delinquency in payments. This rubber-stamp process came about based on how subprime mortgages were bundled into securities and resold to investors. As demand for those securities increased, lenders peddled more loans to unsophisticated homebuyers. Too many of them didn’t understand the terms and could not afford the payments when adjustable interest rates ballooned. The bubble burst and the economy crashed. As the foreclosure crisis worsened, loan servicers foreclosed on some people who were not seriously delinquent or owed little on their mortgages and never should have lost their homes.

  When Harris arrived in office, Iowa attorney general Tom Miller was leading negotiations to settle the robo-signing case on behalf of the fifty attorneys general. From the outside, it seemed, Harris was slow to engage. In reality, she began meeting with top advisers on the issue immediately. Her first public engagement occurred in March 2011, two months after her inauguration, at the National Association of Attorneys General meeting in Washington, D.C. In her autobiography, she writes that she concluded that the investigation was incomplete and that any settlement amount being discussed would not be based on any math she understood. California, which was home to seven of the ten cities with the worst foreclosure numbers, would get $2 billion to $4 billion—crumbs on the table. Rather than attend the afternoon session of the meeting, Harris ducked out, seeking to make a point that she was not pleased with its direction. That afternoon, she decided to launch her own investigation, though she was not ready to formally withdraw from the negotiating team. She was, however, beginning to separate herself from the Obama White House, which had been pushing for the deal, and breaking from her brother-in-law, Tony West. Although he was not directly involved in the negotiations, West was the third-ranking member of the Justice Department.

  “They seemed to be under the misimpression that I could be bullied into submission; I wasn’t budging,” Harris wrote.

  Miller, meanwhile, concluded that New York attorney general Eric Schneiderman was actively undermining the settlement and cut him from the team. Schneiderman answered by vowing to undertake his own investigation and flew to San Francisco in an effort to enlist Harris in his effort. The meeting spanned two days. Harris asked lots of questions and clearly grasped the politics and the policy. At the end, she kept her opinions to herself. The Occupy Wall Street movement was under way, as the Left took a page from the Right’s Tea Party movement by demonstrating its anger at the people at the top of the economic ladder, the top 1 percent. Occupy spread to Oakland and San Francisco and to college campuses. In September 2011, Harris traveled to New York, where Schneiderman helped pull together a campaign fund-raiser for her. As negotiations continued, Harris faced pressure from the Left. MoveOn.org was demanding that she hang tough against the banks. The influential Los Angeles County Federation of Labor, AFL-CIO, wrote a letter urging that she abandon the talks. A new organization, Californians for a Fair Settlement, was agitating for Harris to hold out. At first glance, Californians for a Fair Settlement seemed to have sprung up organically. In reality, Schneiderman’s chief of staff, a political organizer named Neal Kwatra, created the group. Significantly, Lieutenant Governor Gavin Newsom, Harris’s sometimes rival, sometimes friend, and potential competitor for higher office, signed on to a letter by Californians for a Fair Settlement, calling the Miller deal “deeply flawed.” The Los Angeles Times quoted from the letter and included a list of the signatories on September 30, 2011.

  On that same date, a Friday, Harris announced that she was pulling out of the talks, this after state attorneys general and the U.S. Department of Justice had worked for almost a year on a deal with the five largest lenders. Knowing that her decision could affect stock prices, she waited until the markets had closed before making her decision public.

  “After much consideration, I have concluded that this is not the deal California homeowners have been waiting for,” Harris said in a letter to U.S. associate attorney general Thomas J. Perrelli and Miller of Iowa.

  Dane Gillette, chief of the criminal division, said Harris’s deputies worried that her brinkmanship would leave California without anything. Harris quoted Governor Jerry Brown, her predecessor as attorney general, as telling her he hoped she knew what she was doing, suggesting he doubted her strategy.

  “The banks were furious that I was causing trouble. The settlement was now in doubt. But this had been my goal. Now, instead of merely noting my concerns, the state attorneys general and the banks would have to answer them, too,” she wrote.

  Harris had allies, most notably Delaware attorney general Beau Biden, the son of then vice president Joe Biden.

  “There were periods, when I was taking heat, when Beau and I talked every day, sometimes multiple times a day. We had each other’s backs,” Harris wrote. It was a relationship that would affect the future course of her life and career. Joe Biden referred to her friendship with his son when he chose Harris to be his running mate.

  * * *

  In meetings with her staff, Harris often spoke of the people they were fighting for, the ones who were not in the rooms where decisions get made. In this instance, those people were the ones who lost their homes or who stayed while homes all around them were abandoned, and neighborhoods deteriorated.

  On January 23, 2012, state attorneys general met in Chicago with Shaun Donovan, the Obama administration’s secretary of the U.S. Department of Housing and Urban Development. Obama, running for reelection, clearly wanted a deal, and his top aides were engaged in making it happen. Word leaked to the press about a possible $25 billion national settlement. Harris skipped that meeting and issued a statement restating her position that she wanted to retain authority to prosecute mortgage lenders who broke the law.

  If anyone was missing her message, on the same day Donovan and other attorneys general were meeting in Chicago, Harris drove to Stockton, a city of three hundred thousand south of Sacramento. It is the self-proclaimed “Asparagus Capital of the World,” although farmers years ago found they could grow it cheaper south of the border. Stockton also was the epicenter of the housing crisis in California and would go bankrupt in June 2012.

  In Stockton, she met with Jose R. Rodriguez, president and CEO of the nonprofit El Concilio, which counsels families facing crises. He introduced her to people affected by the meltdown: a couple in their forties who could not pay their mortgage because construction work had dried up, another couple who bought their house with an adjustable rate mortgage thinking they would be able to refinance before the higher rates kicked in, and a couple in their sixties who could no longer work and lost their home when they couldn’t get their mortgage adjusted.

  “The reality,” Rodriguez told me at the time, “is that for some of these folks, it is not going to get better. The number of people we see crying, I have never seen anything like this.”

  As Edward-Isaac Dovere wrote in the Atlantic, Schneiderman sat by Michelle Obama at President Obama’s State of the Union address on January 24, 2012. That might have given the impression that he was aligned with the White House’s desire to finalize the deal. Harris had declined that invitation, not wanting to suggest that she was finished with negotiating.

  On February 9, 2012, Harris announced the deal she had struck on behalf of California: “Hundreds of thousands of homeowners will directly benefit from this California commitment.” The agreement with the lenders ensured “homeowners actually see a benefit that will allow them to stay in their homes, and preserved our ability to investigate banker crime and predatory lending.” She placed the value of the deal at $20 billion. A month later, the Obama administration announced
the nationwide settlement, which included the California piece that Harris had detailed.

  * * *

  In the end, as she later explained it, the banks provided California $18.4 billion in debt relief and $2 billion in other financial assistance. In total, 84,102 California families received reductions on their first or second mortgages.

  “This issue has never been about anything other than allowing homeowners, hard-working people, to be able to stay in their homes,” Harris said during a February 2012 news conference announcing the settlement.

  However, many Californians who received assistance under the settlement did not stay in their homes, as the Los Angeles Times’s Phil Willon later reported. About half of the $18.4 billion in debt relief given to California homeowners was through short sales, $9.2 billion. The banks took a loss because homeowners sold their houses for less than they owed. But they would need other places to live. When the housing market recovered, they would see no benefit.

  Author and journalist David Dayen, who has written extensively about the mortgage crisis for the Intercept, characterized the settlement as a bank bailout, “protecting legally exposed mortgage fraudsters while doing little to prevent evictions.”

  “For the banks, the settlement was cause for celebration,” Dayen writes, adding, “The actual impact made barely a dent in their profits. And they got a broad release from prosecution, putting their intense legal exposure behind them.”

  Although housing prices have risen, particularly along coastal California, much of the state has not fully recovered from the mortgage meltdown. No politician, no matter how tough or skilled, could have put all the pieces back together from the Great Recession and its housing disaster. Matt Levin, the housing reporter for the Sacramento-based nonprofit news organization CalMatters, reported that as of 2018, California had 450,000 more single-family homes used as rentals than it did a decade earlier. Who owns all those rentals? Mainly Wall Street firms that swooped in and bought homes at cut-rate prices in foreclosure sales.

  * * *

  After settling with the banks, Harris turned her attention to the legislature, putting the weight of her office behind the legislation that came to be called the California Homeowner Bill of Rights. Senator Mark Leno carried the legislation.

  It sought to ban the practice of robo-signing, to ensure homeowners received clear notices that they were at risk of losing their homes, and to require that lenders provide a single contact for distressed homeowners so they would not have to repeat their stories each time they called. One effect would be that homeowners facing foreclosure would get several more months to work out a compromise.

  First, it had to get past California state senator Ron Calderon, a Southern California Democrat who was chairman of the banking committee and often sided with banks. Calderon became the swing vote on a special conference committee established to work out the details of the legislation. As a result, every lobbyist for every bank would need to deal with Calderon.

  “I would make all my best arguments and it was like talking to a brick wall,” Leno said, referring to Calderon.

  Harris spent time walking the halls of the capitol, stopping in the offices of legislators. Although several ducked her, the bill ended up passing by a wide margin in the assembly and more narrowly in the senate. Harris credits legislative leaders with helping push the bill through to a final vote. Leno, loyal to Harris, sees it differently:

  “She made it happen. The whole game changed when Kamala got involved. The attorney general was not going to not get her way.”

  Ron Calderon ended up voting for the bill. Two years later, Ron Calderon, along with his brother Tom Calderon, a former legislator, were indicted on federal corruption charges related to other legislation. They were convicted and sent to prison.

  18 Phenomenal Women

  In September 2012, Kamala Harris was given the honor of a prime speaking slot at the Democratic National Convention in Charlotte, North Carolina. Barack Obama was in a close race for reelection against former Massachusetts governor Mitt Romney. Harris’s goal was to help her friend win. But she and her political staff also thought the speech could be her breakout moment on the American political stage, much like the speech Obama gave in 2004 that catapulted him into the nation’s consciousness.

  After stepping onto the stage for her run-through and looking out into what soon would be a full Spectrum Center, she told the Chronicle’s Joe Garofoli, “It was incredible. It was humbling.” She paused. “I couldn’t help but think, ‘If only my mother could see me.’ ” She was nervous. Who wouldn’t be? Her speech would precede one by Bill Clinton.

  Harris and her team wrote a speech that, while not on the level of Obama’s speech in 2004, was strong. It was a tailored version of one she had been giving to audiences in California, which was still recovering from the Great Recession: “If you really want to know what this election is all about, come west. Visit the forest of foreclosure signs. Witness the mountains of family debt. Talk to the thousands of good families stuck without a path out or a way up.

  “Go to Stockton, California, America’s foreclosure capital.”

  The speech praised President Obama and Vice President Biden for standing up to Wall Street and scorned Mitt Romney for siding with bankers. Then the speech pivoted, flipping the phrase coined during the time that huge financial institutions needed to be bailed out because they had become “too big to fail.”

  “I’ll tell you what’s too big to fail.

  “I say it’s our middle class that’s too big to fail.

  “I say it’s the American dream of home ownership that’s too big to fail.

  “It’s the promise of a universal free quality public education that’s too big to fail.

  “Our young people—the next generation—they’re what’s too big to fail.

  “Environmental protection is too big to fail.

  “And, Democrats, it’s our vision of an inclusive society that’s too big to fail.

  “Marriage equality is too big to fail!

  “The rights of women are too big to fail!

  “Our immigrant communities are too big to fail!”

  The speech was a humdinger and might have left the audience cheering and on its feet. But it was never given.

  Harris deferred to the Democratic National Convention managers, who provided her with a speech that was filled with talking points, none of them her own and none of them inspired. Shortly after beginning, her aides noticed that vast numbers of delegates at the Spectrum Center stopped paying attention and started talking among themselves. At one point, she stumbled over the words that had been given to her.

  What was supposed to have been her big moment in the spotlight went unnoticed. Her aides knew it was terrible. If Kamala Harris brought it up with anyone, her staff was not aware of it. However, Maya, in front of others, rebuked some of her sister’s staffers, as if they were responsible for the speech foisted on Attorney General Harris by Democratic National Convention staff. They weren’t.

  * * *

  Kamala Harris’s tight-knit family is made up of exceptionally high achievers. Maya, two years younger than Kamala, is her sister’s confidante and political adviser. Aides to Harris know never to get between her sister and her. If Kamala Harris has to choose, she’ll always choose Maya.

  During campaigns, Kamala and Maya would talk several times a day. Often, a call with Maya was the first of the day and the last at night. Their sense of humor is similar and the sound of their laugh is all but identical. They’re brilliant, detail oriented, tough, and competitive, sometimes with each other in the ways big and little sisters can be.

  While Kamala was away at Howard University in Washington, D.C., Maya, still a teenager living with her mother in Oakland, had a daughter, Meena. Meena is as close to a daughter as a niece can be to Kamala. Kamala Harris provided Politico with a rare, if brief, glimpse into her personal world, recalling being in law school and coming home to help toilet train Meena: �
��I would come home and we would all stand by the toilet and wave bye to a piece of shit.” Maya, her daughter in tow, graduated from the University of California, Berkeley, and Stanford Law School. According to a story told by Maya, young Meena was playing hide-and-seek with a law student, Tony West. That’s how Maya and her future husband met.

  Tony West was president of the Stanford Law Review, and had worked on presidential campaigns since he was a boy, starting with Jimmy Carter in 1976. He ran unsuccessfully for the California State Assembly in 2000, with Maya as his campaign treasurer. In 2004, he was enthralled by Barack Obama’s speech at the Democratic National Convention and, along with his sister-in-law, worked on Obama’s 2008 presidential campaign. West went on to head the civil division of the Obama administration’s Justice Department and rose to become associate attorney general, the third-highest-ranking Justice Department official. After the Obama years, West worked as counsel for PepsiCo. More recently, he has been general counsel for Uber. In that role, he has battled organized labor’s efforts to force Uber and similar gig economy companies to hire workers as full employees, rather than independent contractors. Kamala Harris took the side of labor, not Uber.

  Maya became executive director of the ACLU of Northern California, one of the nation’s largest ACLU affiliates. In that role, she helped organize the ACLU’s campaign against Proposition 8, the 2008 initiative that banned same-sex marriages for a time. As the 2008 election neared, Maya got hired at the Ford Foundation in New York, a position that allowed her to oversee millions of dollars in grants. Later, she became a policy adviser to Hillary Clinton during Clinton’s 2016 presidential campaign.