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The SCOTUS Merrygoround: Is Ginsburg Shuffle Coming?

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The UPI has an article up with the startling headline “Ruth Bader Ginsburg stepping down in 2015”. The article, which is really more of a pondering question, is bylined today by Michael Kirkland and paints the scenario of a Ruth Bader Ginsburg retirement in 2015 so that Obama has sufficient time left in his second term to appoint and confirm a successor.

Although referenced rather obliquely in his article, Kirkland’s basis is premised entirely on the thoughts and predictions of SCOTUS, AND SCOTUSblog, longtime pro Tom Goldstein in a SCOTUSblog post he did last Tuesday, February 14th. Goldstein may be only one voice thinking out loud, but he carries the bona fides to warrant serious consideration here.

Goldstein points to the confluence of Ginsburg’s age, health, and personal career tracking with that of Justice Louis Brandeis. And the thought that Ginsburg will want to see that her replacement is chosen by a Democratic President. Goldstein’s thought process, originally laid out in the comprehensive February 14th entry at SCOTUSblog, is worth reading. Assuming Obama is reelected, which is still a pretty decent bet at this point (certainly capable of changing though), it is hard to find fault with Goldstein’s logic; in fact, it is rather compelling. I also agree with Tom that none of the current conservative bloc, including swing man Tony Kennedy, are going anywhere anytime soon.

Where I do differ from Goldstein, however, is in his prediction for what would transpire upon the theorized Ginsburg tactical retirement:

Assuming that President Obama is re-elected and that Justice Ginsburg does retire at some point in the next Administration, who will be the next nominee? One thing is certain: it will be a woman. It is inconceivable that a Democratic administration with any reasonable choice would cause the gender balance of the Supreme Court to revert to seven men and two women. Relatedly, appointing three women in a row to the Court is excellent politics.

President Obama will also have a strong desire to pick an ethnically or racially diverse nominee. It would be disappointing for the nation’s first African-American President to make two white appointments, leaving the Court with seven white members. A more diverse Court is a better legacy. Given that the President already appointed the first Latina Justice, most likely is an African-American or Asian-American nominee. That said, I think race and ethnicity are plus factors, rather than an imperative like gender.

I am not sure I buy Goldstein’s certainty of yet another female Supreme Court nominee from Barack Obama. I am just not convinced Obama appoints a third woman in a row, color or not. It sure makes it easier that it would be to fill a “female seat”, Ginsburg’s, I guess, and Obama clearly wanted to see three women justices on the court. But he crossed said threshold, and knowing one of them may not be there so long into the future likely played into the strength of his desire to appoint a second woman after Sonia Sotomayor. Such is quite a different thing from having an abiding determination to insure there are always three women on the Supreme bench.

Further, it really restricts the pool of potential nominees and plays into a plethora of counter Read more →

What Do You Call a “Cornhusker Kickback” for California?

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Remember the “Cornhusker Kickback“? That was the $45 million in expanded Medicaid funding Ben Nelson demanded from the Obama Administration before he’d support Health Insurance Reform. The special treatment for Nebraska gave the reform effort a tawdry feel.

And just as importantly, it did nothing to improve Nelson’s popularity in his own state. When he announced he would not run for reelection in December, reporters pointed to the Cornhusker Kickback as one issue that was making his reelection increasingly unlikely.

Nelson obtained a huge controversial provision in that legislation — derisively called the “Cornhusker Kickback” by GOP opponents — that called for the federal government to pay Nebraska’s costs for Medicaid expansion, potentially saving the state tens of millions of dollars annually. The provision was ultimately killed, but Nelson still paid a political price. Nelson adamantly denied that he traded his support for the Democratic health plan in exchange for the special provision, yet his standing back home took a big hit. Nelson proved to be the 60th and deciding vote for the Democratic health-care package.

Yet it seems like Obama’s trying something similar in his effort to get CA’s Kamala Harris to join in his foreclosure settlement, with $10 billion in aid slated for CA’s struggling homeowners.

Banks and government negotiators have cleared a big hurdle in efforts to resolve allegations of widespread mortgage-related misdeeds, agreeing on terms for a settlement that are being circulated to the 50 US states for approval, state officials and a bank representative say.

The proposed pact would potentially reduce mortgage balances and monthly payments by more than $25bn for distressed US homeowners, these five people said.

The tentative agreement still must be approved by all 50 state attorneys-general, and negotiators have previously missed proposed deadlines. Participants described the proposal terms as set, meaning the states will be asked either to agree to them or decline to participate.

The amount of potential aid is contingent on state participation and would decrease significantly if big states do not sign the agreement. New York and California are among several states that have voiced concerns about the terms of the proposed deal with Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial. New York and California are particularly concerned with the part of the deal that would absolve the banks of civil liability for allegedly illegal mortgage-related conduct.

California borrowers would be eligible to receive more than $10bn in aid if the state were to agree to the terms, according to several people involved in the talks.

Don’t get me wrong. In this case, there’s good reason to give CA a disproportionate part of the settlement funds. Read more →

Why Blame the Failure of the 50-State Settlement Solely on Tom Miller?

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Yesterday, CA Attorney General Kamala Harris announced she was withdrawing from the 50-state foreclosure fraud settlement.

California Atty. Gen. Kamala Harris will no longer take part in a national foreclosure probe of some of the nation’s biggest banks, which are accused of pervasive misconduct in dealing with troubled homeowners.

Harris removed herself from talks by a coalition of state attorneys general and federal agencies investigating abusive foreclosure practices because the nation’s five largest mortgage servicers were not offering California homeowners relief commensurate to what people in the state had suffered, a person familiar with the matter said.

The big banks were also demanding to be granted overly broad immunity from legal claims that could potentially derail further investigations into Wall Street’s role in the mortgage meltdown, the person said.

With CA–the largest state and the one with the greatest foreclosure exposure–this effectively kills the settlement. See DDay for more on why Harris made this decision and what it means going forward.

But Harris’ letter announcing her decision makes something else (which had become increasingly obvious in recent weeks) clear.

Harris gives US Associate Attorney General Thomas Perrelli, not IA Attorney General Tom Miller, top billing on her letter.

This failure has become Perrelli’s baby as much as it is Miller’s.

When they held their last ditch attempt to save this meeting last week, they met in DC, not in IA or some other central location. And the settlement reportedly discussed at that meeting was heavily skewed towards giving the same people who fucked up HAMP another shot at trying to solve the housing situation.

About 80 per cent of the settlement figure, earmarked for the federal government, could be used to fund another round of debt and payment reductions for struggling US homeowners, people with knowledge of the Illinois document said. That would be split between principal reductions on first-lien mortgages and junior liens; payment forbearance for unemployed borrowers; and short sales, blight remediation and transition assistance for homeowners to move into rentals.

The remainder, about $4bn-$4.4bn in cash, could be designated for the states, which then would divide the proceeds to fund a variety of programmes, including assistance to borrowers. About half that amount could be used to pay up to $2,000 to an estimated 1.1m aggrieved borrowers who allege they were harmed by improper practices. [my emphasis]

So when Harris wrote…

California is hurting. We have the most homes and most home borrowers in default. During the period we have been negotiating, more than 560,000 additional homes in California have fallen into the foreclosure process. When we began this process 11 months ago, five of the ten cities hardest hit nationally by foreclosures were in California. Today, eight of those ten hardest-hit cities are here. And, recently, at the same time that we have been negotiating in good faith, foreclosures in California have surged again.

[snip]

Last week, I went to Washington, D.C. in hopes of moving our discussions forward. But it became clear to me that California was being asked for a broader release of claims than we can accept and to excuse conduct that has not been adequately investigated. In return for this broad release of claims, the relief contemplated would allow far too few California homeowners to stay in their homes.

What she was saying, politely but nevertheless saying, is that giving a state like CA that has been devastated by foreclosures perhaps $500 million to deal with the aftermath, and in the process let the banks off the legal hook for abuses beyond just robo-signing just won’t fly.

The Obama Administration may have been offering Harris less than $1,000 per each new homeowner who has fallen into default (to say nothing of all the previous foreclosures), whereas in a state settlement, NV Attorney General Catherine Cortez Masto was able to get about $57,000 per affected homeowner in a Morgan Stanley settlement.

That tells you two things. First, the Obama Administration still doesn’t understand the extent of the damage the banksters they are trying to protect have done. They don’t understand the scale of the challenges facing states and towns and homeowners affected by the banks’ crimes. And second, the “Department of Justice” was ready to sign away justice for scraps with which to fund another ineffectual Treasury-run program without, first, having forced the banks to face the full consequences of what will happen if they don’t offer principal write-downs.

In other words, if you didn’t already know it, DOJ was (and presumably still is) actively looking for ways not just to ignore the banksters’ crimes, but to help them avoid the non-legal consequences of those crimes, too. Which sort of explains the vitriol directed at Eric Schneiderman of late. Two prosecutors, after all, can conduct a national investigation of the banksters’ crimes, DOJ, and the NY Attorney General. And by refusing to go along with the criminally stupid deal Perrelli was negotiating, Schneiderman has made it a lot harder for for DOJ to sponsor yet more injustice.

How Would States Divvy Up the Foreclosure Settlement?

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For the record, I still doubt the 50-State-Less-the-Rule-of-Law-AGs Settlement will happen. A year in, they haven’t even agreed on the underlying guidelines for the settlement, like what they do with MERS.

But this line in the LAT’s coverage made me think of another issue that could kill that settlement.

New York and Delaware have more than a dozen attorneys working full time on their effort. They have subpoenaed or requested information from 13 financial firms, including Goldman Sachs Group Inc. and JPMorgan Chase. [Kamala] Harris would be a key addition to the investigation because California was the location of a vast number of the mortgages and foreclosures that fed into the crisis. She met with Schneiderman in San Francisco last month to discuss participating in the probe.

Harris is weighing whether she would sign on to the 50-state settlement if it gave banks immunity. The main consideration is how much money would go to California homeowners, according to a person familiar with her thinking. [my emphasis]

At least at the moment, the public explanation CA’s Attorney General is giving for her indecisiveness about which side to join is a concern over CA homeowners getting enough out of the settlement.

Now that may just be a convenient excuse to cover political indecision, but it’s a significant point. CA has a tenth of the country’s population, and it was very hard hit by the foreclosure crisis … two years ago.

As the Calculated Risk chart above shows, while California at its worst had the sixth highest percentage of homes in default, it is now 22nd (out of 42 states plus DC) on the list of current percentage of homes in default. So while CA has had the most number of residents go through this shitty process, going forward it might appear to be in much better shape than a lot of other states that weren’t as hard hit by the foreclosure crisis.

But that’s not the entire story. Note, first of all, the reason CA no longer has so many delinquencies:

Some states have made progress: Arizona, Michigan, Nevada and California. Other states, like New Jersey and New York, have made little or no progress in reducing serious delinquencies.

Arizona, Michigan, Nevada and California are all non-judicial foreclosure states. States with little progress like New Jersey, New York, Illinois and Florida are all judicial states.

That is, CA has worked through its delinquencies because its residents (like those of AZ, MI, and NV), have been subjected to the full brunt of the servicer abuses that this settlement is supposed to address, without the opportunity to challenge a foreclosure in court. So if we could measure this quantitatively (precisely what Tom Miller is trying to avoid) CA’s residents would like be even more screwed by the servicer abuses, because no one had an easy way to push back against obvious abuses.

Now look at who–at least as of the first quarter of this year–remains underwater on their house (from this Calculated Risk post). Those states most affected by foreclosures, including CA, still lead the list of states with the highest number of houses underwater, a key indicator for future defaults. The map from the New Bottom Line shows this even more graphically; put FL and CA’s population combined with their high negative equity rate, and they’ve got the largest number of potential foreclosures, over 2 million homes in each (compare that to worst hit on a percentage basis, NV, with 358,241 houses underwater, or IA, with 31,077). Finally, add in the much higher median home price in CA, and it’s clear that Harris ought to be demanding a significant chunk of the settlement funds perhaps in the 15-20% range (nevermind that even that–optimistically $4B–would do proportionately very little in CA).

I originally thought the banks would get to decide how to divvy up the settlement money (which would be prone to abuse in any case). But if the 40-45 AGs who might participate in this settlement plan to decide how the paltry $20B gets split up, then one of the only fair solutions would be for most of those states to give up the right to sue while giving CA and FL the great bulk of the settlement money. That is, a fair solution would have about 20 AGs grant immunity in exchange for little for their own residents.

Is Tom Miller willing to boast of a great settlement only to tell his own constituents (well, his nominal constituents, anyway) they will get nothing?