The reality that the coalition of state attorneys general had frayed in their attempt to reach a settlement over mortgage  practices with big banks had settled in long before California decided that it had had enough. Along with New York, it has now pulled out of the settlement talks.

Can other hard-hit states be far behind? The likes of Massachusetts, Nevada and Minnesota also have voiced some reservations. California AG Kamala Harris, a rising political star if there ever was one, wrote to Tom Miller, the Iowa AG who was heading up the state negotiations:

"California was being asked for a broader release of claims than we can accept and to excuse conduct that has not been adequately investigated....The relief contemplated would allow too few California homeowners to stay in their homes. This is not the deal California homeowners have been waiting for."

Harris noted that California is home to the largest number of homes in default. During the 11 months of negotiation, more than 560,000 homes in the state fell into default. In hindsight, it was indeed too much for all states to agree. The fact is that all the 50 states were each affected uniquely by the housing crisis. The carnage was broad to be sure, but Nevada, California, Florida, Arizona and New York were among those that were especially hard hit. They have a right to seek their specific redress. At the same time, this will not serve to hasten the end of the foreclosure fiasco.

Either together or separately, we need a solution. And so far that has been elusive. Until we get that, the quagmire, especially in the judicial states, will be slow to solve. It should be noted that California is a non-judicial states, and we've seen Bank of America move forthrightly to kick start its foreclosure process recently to work off its large backlog.

For more:
- here' the letter

Related article:
Banks and states return to the negotiating table today