Harris 'Proud' of CA Governor’s Misspent Relief Money

Touts mortgage crisis settlement that victim called 'a slap in the face'

Democratic presidential candidate and U.S. Sen. Kamala Harris (D-CA) / Getty Images
August 9, 2019

Democratic presidential contender Kamala Harris praised California governor Gavin Newsom for a homeowner assistance program that his office once tried to improperly spend on state debt.

The California Supreme Court decided the Newsom administration must allocate $331 million in legal assistance to Californians facing foreclosure, rejecting Newsom's attempts to use the money for other purposes. Harris commended the governor on Twitter and touted her own record as the state's attorney general. She pointed to her role in a $20 billion settlement with major banks in the wake of the 2009 financial crisis.

"In 2012, we took on the big banks and won $20 billion in relief for families who lost their homes to foreclosures," the tweet says. "I'm proud that @GavinNewsom is putting $331 million of the money we won towards resources to help CA families keep their homes."

In 2011, Harris joined a coalition of all fifty state attorneys general to begin settlement discussions with major mortgage lenders over their role in causing the crisis. While the eventual eleven-figure settlement proved successful for Harris politically, it did very little to help Californians facing foreclosure.

Of the $20 billion in relief, nearly $14 billion went to short sales and second mortgages, allowing the big banks to "use settlement money to reimburse themselves for money they might have lost anyway," according to Neighborhood Assistance Corporation of America founder Bruce Marks. About 200,000 homeowners received restitution payments of $1,500, leading one victim to call the settlement "a slap in the face for a lot of us."

The Harris campaign did not return request for comment.

When the California state government allocated $331 million in settlement funds to provide legal assistance to homeowners facing foreclosure, then-governor Jerry Brown instead used the money to pay off state debts. A lawsuit quickly followed, brought forth by nonprofit groups such as the National Asian American Coalition.

Harris was surprisingly quiet during the contentious court battle. According to the New York Times, she "rebuffed housing advocates' requests to meet with her, offering little more than a brief statement that the money should go to homeowners."

After the Brown administration eventually lost the case, Governor Newsom stepped in to renew the fight and appealed the case to the California Supreme Court. His attempt was also unsuccessful. The court ruled in July that the state government must use the $331 million to help homeowners. Newsom, who did not respond to request for comment, continues to draw criticism. National Asian American Coalition president and CEO Faith Bautista accused the administration of ignoring the people and non-profit organizations that the settlement was supposed to help.

"How sure are we that they will be helped when you stole that money from us before, you waited five years?" National Asian American Coalition president and CEO Faith Bautista told the Sacramento Bee. "What we're really praying is that they include us… They don't have the pulse of the people."

Harris's expression of support for Governor Newsom comes just weeks after a former Wells Fargo executive, Miguel Bustos, hosted a fundraiser for Harris with a minimum $500 donation required to attend. Harris has also accepted donations from executives at Goldman Sachs and Citibank. Wells Fargo and Citibank were both included in the $20 billion settlement.