Will we ever get a deal between the big banks and the state attorneys general?

The negotiations have stretched on and on. And it looks now like one state will play a huge role in determining whether a deal can be reached at all. You might think that state would be New York, whose AG has been at the vanguard of the movement to preserve the right of AGs to pursue independent suits for various mortgage misdeeds. But the reality is that the state that is holding the cards right now is California.

The hugely influential state pulled out of discussions in September, along with New York and Delaware. State AG Kamala Harris, a rising political star to be sure, voiced a variety of reasons, mainly that the waiver from liability was too broad and that the offered pot of money to be used for modifications too sparse. Since then, Harris has come under lots of political pressure to change course. As a recent LATimes opinion piece notes, without California it will be harder to get banks to agree to a far-reaching settlement.

No doubt there is a big movement afoot to try to structure the deal to Harris' liking. But that hasn't happened yet. And she just subpoenaed Fannie Mae and Freddie Mac in an on-going investigation. Of course, a lack of a deal would be a blow to all, the states as well as the banks.

As it looks now, the foreclosure fiasco will continue to muddle on. Interestingly, in California--a non-judicial state--banks have stepped up the pace of foreclosures. But the backlogs are still large around the country. Meanwhile, Nevada is taking matters into its own hands, going after robo-signers with criminal charges.

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Related article:
Will California re-join the mortgage settlement process?