First-term Congresswoman Katie Porter (D-Irvine) made waves last month after her grilling of Chase Bank CEO Jamie Dimon went viral. If the soundbites tell us anything, it is that Rep. Katie Porter wants to brand herself as the Patron Saint of consumer finance and taxpayers.
However, in the fracas of a Democratic Presidential Primary, some inconvenient details are starting to emerge about Katie Porter’s tenure as a “watchdog” of bank settlement funds meant to assist California homeowners facing foreclosure.
In 2012, America’s state attorneys general negotiated a punitive settlement with the nation’s largest banks in response to predatory and fraudulent mortgage practices that fueled the financial crisis. A national monitor was appointed by the States to oversee the $40+ billion settlement and ensure compliance that settlement funds reached troubled homeowners at risk of losing their homes.
In California however, then-Attorney General Kamala Harris decided to appoint a political ally, former law professor Katie Porter, as California’s monitor to oversee the $18 billion that was supposed to help underwater California homeowners. Porter was the only state-appointed monitor in the nation and came out of the gates with tough talk about how other programs to help homeowners failed to live up to their hype.
Using funds originally meant for California’s troubled homeowners, Katie Porter negotiated with Kamala Harris a $300,000 salary and benefits package for herself and a $1.56 million-dollar budget for an 11-member staff. Porter, who was then a professor at UCI Law School making approximately $250,000+ per year, ran her operation out of UCI’s Irvine campus and according to University records, Porter went $1.57 million over budget, totaling $3.13 million in staff salaries and benefits. All of this funded by money meant to assist distressed homeowners.
(Above: University of California Irvine, Invoice, October 7, 2015)
Porter and Harris apologists may claim that California’s stewardship of these funds led to superior results compared to other states, however consumer advocates that worked with California homeowners during the mortgage crisis tell a different story.
Last week Reuters published the other side of California’s housing recovery story with less than complimentary marks for Harris and Porter:
“Consumer advocates who worked with California homeowners during the mortgage crisis say the most vulnerable – limited English speakers, the disabled, widows and minorities – had the least luck obtaining relief.”
The article goes on to quote the deputy director of the California Reinvestment Coalition, an association of 300 nonprofit consumer finance groups that maintain that the people who were supposed to get loan modifications were not actually getting them.
We now know that not only did Porter’s multi-million dollar operation fail to track who applied for or received assistance under the settlement, but that Porter also failed to gather any meaningful information regarding ethnicity, income, disabilities, and family status. According to surveys seen by Reuters, credit counselors faced a considerable degree of difficulty obtaining assistance for disadvantaged groups.
Porter contends that 150,000 homeowners received some form of relief under the mortgage settlement in California but admits that at least half of the aid went towards short sales of people who still ended up losing their homes. This equates to $14 billion worth of settlement funds put towards short sales and second mortgages that reimbursed the big banks for money they would have lost without the settlement funds.
The Reuters article quotes nonprofit, advocacy leaders that contend that in essence Kamala Harris took her eye off of the ball once she handed this to Katie Porter and the results of Porter’s stewardship make it hard to tell who exactly was helped by the settlement besides the $14 billion that the big banks recovered from short sales.
According to OpenSecrets, a campaign finance watchdog group, Katie Porter’s political fundraising figures show a cozier relationship with Wall Street than her press releases portray. In her last campaign, Porter received nearly half a million dollars in campaign contributions from the Securities and Investment industry. Senator Kamala Harris’ records match Porter’s in that the fourth largest source of her campaign funds comes from the securities and investment industry totaling $798,677 in contributions, $5,475 of it coming from Wall Street-connected political action committees.