The Foreclosure Deal Is Good, But Is It Good Enough? Kamala Harris is known for her entrances. A political crusader and cultural-barrier breaker, she was until recently famous for a trifecta of firsts: first African-American, first Indian-American, first female attorney general of California. But then Harris did something that took many by surprise: she made a grand exit. After multiple trips to Washington for heated closed-door sessions, Harris walked away last September from a deal highly coveted by President Obama and shepherded by a score of federal agencies, a proposed settlement between the 50 states" attorneys general and the five biggest banks involved in the home-mortgage crisis. "I have concluded that this is not the deal California homeowners have been waiting for," Harris wrote to the settlement's committee chairs, just nine months into her job, noting that more than half a million more homes in her state had fallen into the foreclosure process since discussions had begun in late 2010. Harris's abrupt departure helped derail that agreement, and response to her move was swift. Some critics, including members of the financial community, spoke of a newcomer making an irresponsible gamble to enhance her own political stature. Those who approved saw a savvy bluff-caller doing her job for a state that leads the nation in homeowner woes, with 2.2 million borrowers currently underwater on their mortgages and seven of the 10 cities in America hardest hit by foreclosure. Still others believed Harris would never agree to a deal. That last theory, at least, was put to rest on Thursday with the announcement that 49 states, including California, have agreed to a three-year, $26 billion settlement with Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, and Ally Financial. A formidable negotiator, Harris had pushed up her state's take from somewhere between $2 billion and $4 billion to $12 billion, with an estimated $6 billion more in value to owners coming from banks acknowledging the diminished value of homes. She also extracted special concessions on how the relief will be guaranteed and distributed. Along with other, equally intransigent AGs, Harris also prevailed against the banks" bid for across-the-board immunity, preserving for states the right to pursue their own investigations into how loans were made to borrowers and how they were then packaged and resold in financial markets. Kamala Harris., Robyn Twomey for Newsweek Still, some critics branded the deal a sell-out (after all, bank shares rose), pointing out that it offers scant relief for those who have already lost their homes to foreclosure. Harris herself - for whom the settlement is arguably a huge political coup and a boost for any future gubernatorial run - did not crow. "We brought an $18 billion life preserver to homeowners who need relief right now," she told Newsweek in an interview after the deal was announced. It's a good thing, but we have a lot more work to do. By no means are we done. Harris, 47, has never shied from a central role in the long-running negotiations. Sitting in her office under a portrait of Martin Luther King Jr., she was roused easily from professional calm to righteous fervor, revealing shades of the career prosecutor who first made her name battling the grittiest of crimes, including child sexual abuse. Her customary uniform of dark pantsuit, high heels, and pearls suggests a rather glamorous CEO, but the bursts of intensity are that of a courtroom dynamo, by turns compelling outrage and inviting empathy, disarmingly folksy and clearly comfortable under pressure. That combination of charm and combativeness has marked her as a comer in Democratic circles, and she's adept in a wide range of social climes. In conversation, she brings up visits with elderly African-American women who became targets for fraudulent mortgage activity - "they are my grandmothers!" - and fondly remembers the black congregants at churches in Los Angeles who supported her campaign for attorney general. At the same time, the liberal white establishment of San Francisco has been her fundraising bedrock, and one of her best friends is the socialite Vanessa Getty, wife of a Getty Oil heir. As a young assistant district attorney in the 1990s, Harris developed an expertise in domestic violence, child sexual abuse, and sex slavery cases. As district attorney in San Francisco starting in 2003, she reframed the legal lexicon around sex crimes, replacing the pejorative "teenage prostitute" with "exploited youth," and pushed for an amended state law that would ensure stricter penalties for johns. Common to these cases was "the pathology of the predator, the bottom-feeder," Harris said, adding that "be they a runaway teenager or a homeowner, an insidious part of the equation is the predator." While opponents labeled her as soft on crime, her record proved otherwise. Another focus of hers was on reducing recidivism. Perhaps most noticeable is Harris's penchant for moral argument, which she traces to her mother, Shyamala Gopalan, a breast-cancer researcher of some renown who died in 2009. The India-born Gopalan came to the U.S. as a 20-year-old aspiring scientist and went on to several distinguished professorships. She and her husband, Donald Harris, a Jamaican-American academic, had two daughters; after their divorce Gopalan parented Kamala and her younger sister, Maya (now a vice president at the Ford Foundation), alone. "She was 5-foot-1 and you would think she was 6-foot-2," Harris said. "She told us, "Whatever you choose to do, do it. Fight systems in a way that causes them to be more fair, and don't be overwhelmed by what has always been. You can see the potential and make it happen." " Harris's election in 2010 as attorney general in a nail-biter of a race - her Republican opponent proclaimed victory, and Harris triumphed only after a protracted vote-count process her staff call the "21-day election night" - threw Harris into many battles to make things "more fair." She meets regularly with California's tech sector and has brainstorming sessions with a crew of digital gurus, including Lotus founder Mitch Kapor and Google's chief legal officer, David Drummond. Topic A: potential innovations in information access and consumer protections that might in some cases supersede the slower path of legislative or court reform. Combating cybercrime is another major goal, as are disrupting both state and transnational gangs, enforcing current environmental and consumer-protection laws, and working to ameliorate the effects of climate change. Then there's Prop 8, California's voter-led gay-marriage ban. Harris declined to appeal a federal judge's ruling that the ban was unconstitutional (as did then-governor Arnold Schwarzenegger and her predecessor, now governor, Jerry Brown), and stated that last week's affirmation of the ruling was "a victory for fairness." Angry supporters of the ban sought and won a separate court ruling enabling them to forge ahead without her office's assent; the case now likely heads to the Supreme Court. But it is the high-stakes wrangle with the banks - over who should share the blame with devastated homeowners and how to ensure that nothing like this happens again - that has become Harris's signature issue. During two terms as San Francisco's D.A., Harris created a mortgage-fraud team to explore burgeoning local problems with loan origination, and among her early moves as attorney general was to launch a statewide strike force that now numbers 50 - second in size only to the federal one. Led by Harris's senior counsel, Michael Troncoso, the team has been shutting down the operations of lawyers and brokers who defraud homeowners and has also been investigating civil-rights violations. The Center for Responsible Lending has reported, for example, that among borrowers who all had good credit ratings, African-Americans and Latinos were three times as likely to be steered to high-interest-rate loans as white borrowers. Harris stresses that not all homeowner woes are the fault of lending institutions, but said, "People have the idea that everyone who signed mortgage documents should have known what they were signing. It's not fair, and it's not true. I confess that here I am, the chief elected law officer of the state of California, and I did not read each page of my own mortgage. Hence her determination to preserve her investigative and prosecutorial powers in any settlement. New York's AG, Eric Schneiderman, was ejected from the core negotiating team last August after challenging the scope of absolution; Obama has since tapped him to help lead a federal mortgage-fraud task force. But even when other AGs were signing on last week, Harris held out. And she went directly to the banks, sidestepping the official negotiating team the AGs collectively were using. "We didn't have a deal until 1:30 in the morning on Thursday [Feb. 9, the day the deal was announced]," Harris told Newsweek, describing a tumultuous and at times frantic back and forth with representatives of the five banks. We decided it would be more effective to have a direct conversation. For me, this deal has always been about the details, not the grand gestures. The deal Harris worked out, which she calls the "California commitment," includes a schedule for relief based on homeowner needs rather than banking priorities and the right to take noncompliant banks to state as well as federal court. "Promises are not enough," she said, a reference to hard lessons learned by California and other states in an earlier settlement with Countrywide Financial (now owned by Bank of America) that proved toothless. Further, she has decided that despite the president's appointment of Joe Smith, currently North Carolina's commissioner of banks, to the role of settlement overseer, she will have her own monitor. "I think Joe Smith is a great choice, but I want a California watchdog too," she told Newsweek. She also worries about the 62 percent of California mortgages held by Fannie Mae and Freddie Mac and not covered by the settlement agreement. I often wake up at three in the morning and think, We've been spending so much time with the five banks, but what about this other piece of the pie? Harris said. Why can't we go after them? In December, she filed motions against the two entities as part of her investigation into "dual-tracking" - jargon for their policies of initiating foreclosure while an unwitting homeowner believes he or she is working with the servicer on a loan modification. Harris's ability to express the experiences of homeowners in personal terms has likely further contributed to her influence on the issues. "I remember when my mother bought our first house," she recalls. I was in high school. It was a very big deal. It represents all that hard work, and it's yours. That's your roof, how you're going to pay for college tuition, for your retirement. The state of mind of someone who's going to lose that home - they're embarrassed, defeated, isolated. It's a cocktail for disaster. This passion for the fate of individuals under siege has led many observers to note another first for Harris - in the double role of Obama's good friend yet moral scold. When Harris rejected the earlier settlement offer, which was seen as vital for Obama in this election year, their relationship was tested. But it went way back to when Obama was a senator. Harris campaigned for Obama in Iowa in 2008 and, during her own latest campaign, frequently invoked their shared multiethnic background and experiences, including indoctrination into politics via the civil-rights movement, which she has described witnessing from a stroller. Obama, meanwhile, raised funds for just one down-ticket candidate in 2010: Harris. "They go back a long way and have always had a warm relationship," Valerie Jarrett, Obama's senior adviser, says. He has been very supportive of her career and very impressed with her as a first-rate public servant. "We're very proud of her role in the settlement," says California representative and House minority leader Nancy Pelosi. She was brand new in the job, she faced this challenge head-on, and was willing to take the heat. Harris, says George Shultz, the Hoover Institution fellow and former secretary of state, "seems to have an inner gyroscope that goes beyond being smart and accomplished - it's about being reflective, thinking in broader terms about governance. She's chosen a path that's essentially about making the country work.