The proposed $25 billion foreclosure settlement between five major banks and federal and state government agencies is beginning to show signs of coming apart, with two high-profile state attorneys general balking at the offering and the head of one of the major banks predicting that a new White House proposal will kill the deal.
According to media reports, California Attorney General Kamala Harris and Delaware Attorney General Beau Biden have rejected the proposed settlement. Shum Preston, a spokesperson for Harris, said the proposal was ‘inadequate for California’ and that it lacked ‘transparency, relief going to the most distressed homeowners, and meaningful enforcement that ensures accountability.’ Biden's office did not offer a public statement on his decision, stating it was too early to explain the specifics of his rejection.
On the other side of the negotiating table, CEO Jamie Dimon of JPMorgan Chase & Co., one of the five banks involved in the settlement, warned that the settlement will fail if the White House pursues a new program to launch new investigations of mortgage lenders and securitizers. President Obama proposed the new investigations during Tuesday's State of the Union speech.
‘It has a pretty good chance of derailing it,’ Dimon said in a televised interview with CNBC. ‘I think it would be better for America if that settlement took place. If this thing derails that, so be it.’
The White House has yet to formally announce the launch of the new investigative unit. However, the New York Times is reporting that New York Attorney General Eric T. Schneiderman has been tapped to lead the new probe. Last August, Schneiderman was ejected from the executive committee responsible for guiding negotiations between attorneys general and the nation's largest banks. Iowa Attorney General Tom Miller, who spearheaded the settlement negotiations, accused Schneiderman of actively undermining the talks.
Neither the White House nor Schneiderman's office has confirmed the Times' report.