Kamala Harris' hard bargaining gains notice

California Attorney General Kamala Harris, seen here in 2012, negotiated an $18 billion settlement with mortgage lenders. California Attorney General Kamala Harris, seen here in 2012, negotiated an $18 billion settlement with mortgage lenders. Photo: Michael Macor, The Chronicle Photo: Michael Macor, The Chronicle Image 1 of / 3 Caption Close Kamala Harris' hard bargaining gains notice 1 / 3 Back to Gallery

Nine months into her job as California attorney general, Kamala Harris found herself across the table from lawyers for five of the nation's biggest lenders, trying to hammer out a deal to help mortgage holders weather the foreclosure crisis.

She quickly concluded the proposed terms were too easy on the banks.

"I don't think we're going to be able to work this out," she told one bank's general counsel at the 2011 talks. Recounting the gamble years later, she said her decision to forgo a $4 billion settlement wasn't made in haste. "I didn't walk out of there in a huff and a puff without reflection," she said. "But it didn't take long for me to be very clear in my mind."

Her bet paid off. Five months later, the banks agreed to pay $14 billion more. This month, Harris secured another victory, getting her own $300 million chunk of the landmark $13 billion JPMorgan Chase mortgage settlement.

Harris hasn't let up on her effort to chase down wrongdoing tied to the 2008 financial collapse. She is pursuing Standard & Poor's, accusing it in a $1 billion lawsuit of falsifying ratings on mortgage-backed securities, a claim that may result in triple damages.

A former San Francisco district attorney renowned for going her own way, and the sister-in-law of Tony West, the No. 3 official at the U.S. Justice Department, Harris is wrapping up her third year with a resume that some see as a solid foundation for a leap to higher office.

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"Clearly, her star is on the rise," said Corey Cook, a University of San Francisco political science professor. Harris is "regarded nationally as one of the leading law enforcement officials of the country."

Obama speech

Harris, 49, who gave a speech for President Obama at the 2012 Democratic National Convention, is seen as a strong candidate in 2018 to succeed fellow Democrat Gov. Jerry Brown after they each serve one more term in their current posts. Such a candidacy would give Californians a chance to elect their first African American, female and Indian American governor.

An early Obama supporter, Harris was in Chicago to celebrate his 2008 election after helping lead his campaign in California. Obama repeatedly asked her if she would consider relocating to Washington, according to a close adviser. Harris, who was born in Oakland, where she began her career as a prosecutor, said she made a decision the morning after Obama's election to remain in her home state.

"She's a front-runner the next time there's a seat in the governor's office," said Thad Kousser, a political science professor at the at UC San Diego.

Mortgage settlement

Harris' role in the multistate settlement over foreclosure practices in the wake of the 2008 collapse helped make her a national figure.

In February 2012, JPMorgan, Bank of America, Wells Fargo, Citigroup and Ally Financial reached a $25 billion settlement with 49 states and the federal government to end a probe of abusive foreclosure practices stemming from the collapse of the housing bubble. Harris said at the time that California would get as much as $18 billion from the accord, which it did.

While that accord helped propel Harris toward a prominent role in this year's JPMorgan settlement led by the Obama administration, she has been accused by some closer to home of letting her personal politics undermine her official role defending state laws, and for neglecting more bread-and-butter law enforcement issues.

John Eastman, a professor at Chapman Law School, said Harris' politics drive her legal agenda. He cites her refusal to defend Proposition 8, the 2008 voter-approved initiative banning same-sex marriage that was set aside by the U.S. Supreme Court on procedural grounds.

Her legal analysis was "based on her policy preferences rather than the law," Eastman said.

Harris said it was her duty to uphold the principle of equal treatment under the law.

"Yeah, I didn't defend it," she said of Prop 8. "It's against the Constitution of the United States."

Technology firms

The targets of her 1,184-lawyer office have included some of the state's biggest technology companies. Last year, she prodded Apple and Google to develop an industry protocol giving consumers more control over personal information when they use smartphones and tablets.

She also stepped up antitrust scrutiny of Silicon Valley, probing Google over dominance of Internet search and appealing a decision throwing out a lawsuit over eBay's hiring practices.

Harris' interest in technology extends to modernizing the way law enforcement uses it.

Sitting at her desk, she imitates the crackling of a patrol officer's radio in a wind and rain storm as she describes the need for a fail-safe way to quickly communicate information on suspects. She worked with the San Francisco Police Department to develop "Justice Mobile," an application for accessing criminal records on smartphones that is used by about 140 cities and counties.

"The patrol officer on his smartphone goes into the mobile app, puts this guy's information in, boom! Gets it right there, right in front of him - doesn't have to make sure he heard it correctly and transmitted the information correctly - it's right there in real time," she said.

S&P litigation

One of Harris' biggest tasks as she enters the last year of her first term is guiding her case against S&P. The ratings company has been strongly contesting lawsuits by a dozen states, and an unprecedented $5 billion suit by the U.S. government.

California's case against the firm and its parent, McGraw Hill Financial, differs from those by the U.S. and other states because it includes an allegation the ratings company used false statements about mortgage-backed securities to defraud, which if proven would allow her to seek $3 billion.

Harris is seeking to hold S&P responsible for losses by state pension funds that bought mortgage-backed securities that were awarded AAA ratings.

California's case remains in state court in San Francisco. A status hearing on Harris' case is scheduled for Dec. 9.

Harris said she might not have been able to bring the S&P case if she had consented during the 2011 talks to broad liability waivers protecting banks from further claims over lending and securitization.