Will Our Attorney General Candidates Get The Prison Crisis?

Today, Chief Privacy Officer at Facebook Chris Kelly announced an exploratory committee for the race for California Attorney General. He joins a field that includes Assemblymembers Ted Lieu, Pedro Nava and Alberto Torrico; San Francisco DA Kamala Harris, and Los Angeles City Attorney Rocky Delgadillo. In his statement, which you can find at his website, Kelly talked about efficienct and effective government, Internet safety, proper training and equipment for law enforcement, and stopping trafficking. The words "prisons," "jails," "corrections" or "parole" was not mentioned.

Our prison system is a mess. We have the highest recidivism rate in the country, mostly because 2/3 of our prisoners returning to jail go there because of technical violations of their parole. This turns jails into giant holding pens instead of areas for rehabilitation and treatment, as well as colleges for nonviolent offenders on how to get involved in violent crime. The overstuffed prisons cost more money to staff and service as they become more dangerous, leading to the state spending more on incarceration than higher education. Despite all this spending, conditions in the prisons are medieval, with the ACLU proposing the closure of the LA County Men's Central Jail. Prison officials are discussing release of 8,000 nonviolent and terminally ill offenders, but that's a drop in the bucket. We also have denied prisoners their Constitutional right to health care, and have a federal receiver now remedying that situation, taking it out of the hands of the legislature. The "tough on crime" mantra that has ruled the thinking of both parties on this issue has utterly and completely failed.

And yet, our Attorney General candidates and our gubernatorial candidates view this absolute crisis as just another check on their list, instead of the serious problem it is. Gavin Newsom didn't bring it up in his speech, though I did ask him about it in the blogger meeting afterwards. He talked about how we need a re-entry strategy better than the failed parole system, and cited some re-entry reforms in San Francisco that have helped matters. And he stated that having the courts step in to fix the problem presents an opportunity for real reform. With respect to the drug war, which lies at the heart of this, he expressed his support for drug courts and mental health courts and the kind of options that wouldn't consign nonviolent offenders to the rigors of overcrowded prison life when they need medical treatment. And he vowed to have more detailed programs available soon. But when it counted, on stage, he said nothing. Jerry Brown did tackle the issue, but his non-stop fight against the prison health care receiver and sensible steps like Prop. 5 destroy any credibility he may have had on the issue.

I have appreciated Greg Lucas' interviews with some of the candidates in the Attorney General's race, and I have paid particular attention to their views on the prison crisis.

Here are Alberto Torrico's ideas to deal with recidivism:

CC: What’s the best way to reduce recidivism?

AT: First, we need to evaluate. See what programs work and don’t work. We’ve got to figure out what we’re going to do about these parolees. Put all these people out and then there’s too many parolees and too few parole officers. We can’t continue to pretend our prisons are drug rehab centers because they’re not. We need to get resources to people who can be helped and make sure when they’re tried at the local level they get put into programs that work.

I’ve been a criminal defense lawyer. I’ve been a labor lawyer. I represented a public agency. The judge tells people under Prop 36 (drug rehab law) that you’re not going to jail, you’re going to get counseling once a week for 12 weeks. You’re not going to beat an addition one hour a week over 12 weeks.

He seems earnest about lowering the recidivism rate as a financial and moral imperative, and these ideas are somewhat noble, but they read like bullet points, without the innovation necessary to really deal with this crisis. It's not just about hoping the locals solve the problem, but a strategy that focuses on rehabilitation, re-entry and alternatives to prison right at the top.

Here's Ted Lieu on the same subject:

CC: Not sure how much it costs but it has to be expensive when we parole 120,000 people a year and within two years over 70 percent are back in prison.

TL: It is a sort of downward spiraling problem. Because we have a prison-overcrowding situation we now aren’t doing any of the skills training in prison programs that teach people how to function in society when they leave prison. And then people come back to prison because they have nowhere to go and that increases the over-crowding.

I’m a big supporter of drug courts. If someone is addicted, they should get treated. When revenues are falling off a cliff its extremely difficult to fund the programs we need to help people when they get out of prison. Long-term view is that yes it costs some money now but in the long-term it would help the state save money.

If an inmate works toward a degree then they should get early release credits as an incentive to do such things. Part of the problem – and this is a much larger fix – is I think I we also need to improve our education system. If we did, we’d have less people in prison as well.

I just see a lot of people talking around the problem. I support drug courts as well, but I think there's a mindset change that's needed. The Attorney General at this point is in a position to transform the entire way we think about prisons and rehabilitation. Rocky Delgadillo gets closer to that.

CC: Speaking of costs, recidivism is very expensive. Something like 120,000 people are paroled each year and 70 percent are back behind bars within two years.

RD: We’ve got to get on the front end. One thing we know about gang members and people who have been in prison is they tend to have a shelf life it tends to end. But if they’re young and active and they go out they do it again. Why? Because in prison they get to hang out with the best in their business. And we pay for it. Great health care plan. So when they get out, they go back to it again. So the answer is to send less in.

We have a program called “First Chance.” I grew up in Northeast Los Angeles. People would say they’ll give you a second chance. You can’t have a second chance until you have a first chance. This is a program for young, but adults who get into our system. Not where they’ve done a serious crime but we know they’re involved with gangs or negative activity. We allow them to go to job training and school and if they complete it, we drop the charges. It’s a much better investment up front then to try and deal with them after they’ve been in prisons. In there, it’s an abyss.

Finally, here's Kamala Harris, who actually pre-empts the discussion by raising recidivism without being asked:

CC: What role can the Attorney General play in the state’s seemingly endless budget mess?

KH: First, critically examine how the criminal justice system is working and whether we are being most efficient with limited dollars. Here’s an obvious example: Recidivism. California has the highest recidivism rate in the country. On an annual basis we release more than 120,000 prisoners and within two years of their release 71 percent recidivate. That’s costing us a lot of money.

In San Francisco, we created a re-entry initiative in my office. Its called “Back on Track.” It’s for low-level, first-time, non-violent offenders. I brought on my friends from labor — the building trades guys — friends from the business community, non-profits, and we give the parolees job skills development, education and help them meet things like parenting needs. A lot of these young offenders are parents. We reduced recidivism for this specific population from 54 percent to less than 10 percent. The national DA’s association has designated “Back on Track” as a national model.

My vote in this crowded Attorney General's field will be almost entirely predicated on each candidate's approach to the prison crisis. Will they reverse the "tough on crime" myth and start talking about sentencing reform? Will they discuss serious options to reform parole? Will they bring up innovative strategies around re-entry and recidivism that would put the focus on rehabilitation and spend on the front end to save on the back end (Hint: check with Kansas)? Will they touch the third rail of the failed drug war by moving toward decriminalization and keeping tabs on those who commit crimes with victims instead of nonviolent drug abuse?

I eagerly await the answers.

Pressured By CA Lawmakers, Obama Expands Mortgage Refinance Program

When the Obama Administration's plan to mitigate foreclosures came out, it was clear that it would be insufficient to deal with the particular challenges faced in California. Initially, the plan would only modify loans where the amount owed was 105% of the home's true value. Given that home prices have collapsed here, this would have helped almost nobody in California. State lawmakers, in particular the Democratic point person on mortgages and foreclosures Asm. Ted Lieu, went to Washington to lobby for changes. And today, faced with a sluggish mortgage rescue program attracting few lenders or homeowners, the Administration expanded the plan.

The Obama administration said Tuesday it is expanding its foreclosure prevention program to cover second mortgages and to direct more troubled borrowers to the Hope for Homeowners program.

Under the administration's new program, the interest rate on second mortgages will be reduced to 1% on loans where payments cover interest and principal and to 2% for interest-only loans. The government will subsidize the rate reduction, with the money going to the mortgage investor [...]

Also Tuesday, the administration said it is now requiring servicers to offer troubled borrowers access to Hope for Homeowners as a modification option if they qualify.

Expanding Hope for Homeowners would address one of the major holes in the original Obama foreclosure prevention plan. It helps homeowners whose homes are now worth far less than their mortgages.

Servicers had balked at participating in the Hope program because it required they reduce the mortgage principal balance to 90% of a home's current value.

Hope for Homeowners, which began in October, is being revamped in Congress. Servicers would have to reduce the principal to 93% of the home's value. The change would also reduce the program's high fees, which turned off many troubled borrowers.

Loan servicers get a fair bit of cash incentives for participating in the program, which I don't totally support, but if we have to bribe lenders in order to keep people in their homes, that makes more sense than spending the same amount of money on the fallout from a foreclosure. And lenders do take a haircut in the Hope for Homeowners program, the first loss to my knowledge that lenders have been forced to take.

Asm. Lieu responded with this release:

“I am very pleased the Obama Administration today acted on the concerns raised by states such as California and took two steps to expand refinance and foreclosure assistance to distressed homeowners.

First, the Administration announced it would incorporate the Federal Housing Administration’s (FHA) Hope for Homeowners program into the existing Making Home Affordable Program. This is significant because currently, the Making Home Affordable Program has a 105% underwater refinancing cap, which shuts out many Californian homeowners. The Hope for Homeowners program does not have that limitation; instead, the Hope for Homeowners program states that lenders will take a loss on the difference between the existing loan amount and the new refinanced loan, which is set at 96.5% of the appraised loan value.

For example, under the existing Making Home Affordable program, a homeowner whose home is valued at $100,000 but owes $120,000 on the existing loan balance would not qualify for refinancing under the program because the loan is 120% underwater. However, under the Hope for Homeowners program, the homeowner could qualify and the new refinanced loan would be $96,500. The lender would take the loss of $23,500. The Obama Administration would increase the number of lenders participating in the Hope for Homeowners program by offering financial incentives to the lenders.

Second, the Administration announced steps to address the second lien problem. Many distressed mortgages have two liens and often the second lien holder does not want to modify the loan. The Obama Administration will provide financial incentives to allow the second lien to be reduced or extinguished.

These two critical actions will expand assistance to distressed homeowners in states such as California, where many loans are more than 105% underwater or have second liens.”

This is decent news. Unfortunately, the tool that homeowners really need to stave off foreclosure, the ability for bankruptcy judges to cram down the principal of a loan on a primary residence, appears poised for what amounts to defeat in the Senate, a testament to the continued power of the nation's biggest banks.

In order to garner the support of conservative Democrats and a few Republicans, the proposal has been watered down. The bankruptcy legislation will still allow homeowners to renegotiate mortgages in bankruptcy - the so-called cram down provision - but only under strict conditions. The banking industry has lobbied fiercely against cram down, but Durbin said on the Senate floor Monday night that the compromise was supported by Citigroup, which has been at the negotiating table.

"In the past, some of my colleagues understood the need for action but have been uncomfortable with the original language. Let me be clear: this amendment is different," said Durbin. "The amendment I'm going to offer will make a modest change in the bankruptcy code with a lot of conditions. It won't apply across the board. This amendment limits assistance in bankruptcy to situations where lenders are so intransigent that they are unwilling to cooperate with the foreclosure prevention efforts already underway - Obama's homeowner assistance and stability plan and the Congressionally-created HOPE For Homeowners, which this bill will greatly improve." [...]

Meanwhile, the banking lobbyists are furiously lobbying against it and Durbin acknowledges it will be difficult to "muster the votes, although I know it will be hard."

It is "hard to imagine that today the mortgage bankers would have clout in this chamber but they do," said Durbin. "They have a lot of friends still here. They're still big players on the American political scene and they have said to their friends, stay away from this legislation."

We will be in a better position with foreclosures by the end of the week than we were at the beginning, but not where we need to be.

Ending The Special Election Merry Go-Round

Assemblyman Ted Lieu, who joined Calitics yesterday for an online town hall, has an op-ed with Gautam Dutta of the New America Foundation arguing for an election reform he will soon combine with a bill, to institute instant runoff voting for all special elections in California.

Here’s the root of the problem. On March 24, 2009 barely 6 percent of registered voters showed up for a special election to fill a vacancy for California’s 26th Senate District. In an area with almost 1 million residents and 400,000 registered voters, only 23,000 civic-minded citizens decided who would replace former State Senator Mark Ridley-Thomas (newly elected to the Los Angeles County Board of Supervisors).

How much did this special election cost? A whopping $2.2 million of our tax dollars – nearly $100 per voter – according to the Los Angeles Registrar-Recorder / County Clerk.

Unfortunately, we’re not even close to being finished. Since no candidate won a majority, we must hold a second election that will cost even more money. Because this is a heavily Democratic district, it is certain the Democratic nominee, Assemblymember Curren Price, will win. Yet Mr. Price must wait two months for a second election before he can be sworn in as State Senator.

Far from being “special”, special runoff elections cost millions of tax dollars to administer — at a time when governments have been forced to lay off schoolteachers and workers.

Obviously, the Assemblyman is making the fiscal responsibility argument for combining low-turnout special elections through IRV. But there's another crucial argument to be made - the irresponsible delay in proper representation in the legislature. Mark Ridley-Thomas was elected to the LA County Board of Supervisors in November, and his replacement won't take office until May. That's unacceptable, and especially so in California, where the Yacht Party uses the conservative veto to hijack the budget process. With a faster resolution of the Ridley-Thomas seat, for example, Republicans would have one less vote to use as leverage for the budget.

And this is more acute in the case of special elections for Congress in CA-32 and CA-10. Imagine, for example, if Sen. Gil Cedillo wins the Solis seat. He could be replaced by a sitting Assemblymember, which is the logical scenario. Then THAT Assembly seat needs to be filled. By the time all the special elections and runoffs are complete, we're well into 2010.

Enough. Instant runoff voting is a perfectly acceptable way to divine the will of the people without the need for a separate runoff election. The aforementioned Mark Ridley-Thomas has called for a feasibility study into IRV for these special elections. Lieu and Dutta explain:

With IRV, voters get to rank their choices, 1, 2, 3. If your first choice cannot win, your vote automatically goes to your second (i.e., runoff) choice. It’s like conducting a runoff election, but in a single election. If IRV had been used last night, the election for the Senate district would be finished.

IRV has already been adopted by San Francisco, Oakland, Minneapolis, Memphis, and Santa Fe. Currently, Louisiana, South Carolina and Arkansas all use IRV for overseas voters. A number of prominent leaders have endorsed IRV, including: President Barack Obama, Senator John McCain, California Controller John Chiang, California Secretary of State Debra Bowen, and former Los Angeles Mayor Richard Riordan. Influential civic groups also support IRV, including: Los Angeles Area Chamber of Commerce, Los Angeles League of Women Voters, Los Angeles County Federation of Labor, Asian American Action Fund, Southwest Voter Registration Education Project, and New America Foundation.

This is not only a budget issue, it's the right reform for California. Let's end the special election merry go-round.

Ted Lieu At Calitics

If you get a chance, take a look at Asm. Ted Lieu's online town hall at Calitics. He got some great questions and gave some pretty good answers on the foreclosure crisis and other matters.

Ted Lieu Versus The Housing Crisis

This week, Barack Obama announced the details of his plan to save up to 9 million homeowners facing foreclosure from losing their residences. The goal is to place a floor on foreclosures and help people whose rates have reset to work out loan modifications with their lenders. The federal legislation that passed the House which would allow bankruptcy judges to modify the terms of loans, which gives homeowners a powerful stick to force the lenders to pre-empt a cramdown from the judge, will also help this.

Unfortunately, the class of homeowners who would be left behind in this plan are those who are "underwater" on their homes; that is, they owe more on the principal of the home than the current value. And that's an accurate depiction of a very large segment of California homeowners.

The Obama administration's plan to stave off foreclosures could fall flat in California, where nearly one-third of mortgage holders are underwater on their loans -- many of them by amounts that would disqualify them for government-sponsored refinancing.

The problem is likely to be especially acute in areas like the Inland Empire, where homes have lost more than 40% of their value in the last year and nearly half the homeowners owe more on their loans than the properties are worth.

"They're underwater by six figures in many cases," said Greg McBride, a senior analyst with Bankrate.com. "Many homeowners in Southern California are left to twist in the wind."

Under the Obama plan, people who are current on their mortgages could obtain new loans with lower rates for as much as 105% of the value of their homes. That means people could borrow $315,000 against a home worth $300,000.

The problem is that in California, many people owe far more than 105% on their homes, McBride said.

The thinking may be that stopping the worst foreclosures from occurring and lowering the overall rate will stop the dramatic slide in home prices and give those who are underwater a chance to make up the difference. But we may not have that kind of time, as so many are drowning in debt with seemingly no hope to dig out. In addition, the 10.1% jobless rate here (and rising in February, to be sure) will mean that a substantial number of honeowners will simply be unable to pay no matter what kind of modification can be worked out, and so the wave of foreclosures will continue.

Into this troubling situation has stepped Ted Lieu, the legislature's point person on the housing crisis. He is calling on the Obama Administration to do more.

"Many distressed homeowners in California are underwater by more than 5% on their home loan, which makes them ineligible to apply for refinance assistance," said Lieu, author of a state foreclosure moratorium law that Gov. Arnold Schwarzenegger signed last week.

Lieu said he would meet next week with administration officials to discuss his proposed changes [...]

Lieu said that whatever its flaws, the Obama plan addresses a root cause of the nation's economic woes by trying to help homeowners rather than "following the Bush administration policy of just throwing money at the banks."

Nonetheless, he said, the refinancing limit should be raised, perhaps to 115%, to help more people obtain cheaper loans.

"Otherwise, you're just going to end up helping a lot of people outside California," Lieu said.

It's just hard to put a single national standard on the plan when the circumstances are wildly different depending on the region.

Let's also note that Lieu's own housing legislation will begin to kick in shortly. This is from a press release:

My legislation, the California Foreclosure Prevention Act, will now compel a lender to modify a loan well before a homeowner should need to seek a solution from a bankruptcy court. Beginning in May, California will impose a 90 day foreclosure moratorium unless a lender offers a comprehensive loan modification program based, in part, on criteria set forth by the Federal Deposit Insurance Corporation. By adding a strong disincentive if a lender refuses to modify home loans, California’s action not only compliments the President’s plan, but gives him another stick to stabilize the real estate market and this economy.

It's worth praising those lawmakers who are taking the lead, especially on a problem of this magnitude which is such a major contributor to the overall economic meltdown in California.

Arnold Schwarzenegger Wants The US Economy To Fail

That's the only explanation I have for him vetoing AB1830:

Gov. Arnold Schwarzenegger vetoed a proposal today that would have imposed tougher restrictions on mortgage brokers, such as banning them from issuing exotic loans to subprime borrowers that cause balances to grow rather than shrink over time [...]

The bill by Assemblyman Ted Lieu, D-Torrance, would have banned subprime borrowers from obtaining "negative amortization" loans, agreements that offer low initial payments but increase the principal balance over time, boosting interest costs and making them difficult to pay off.

AB 1830 also would have specified that mortgage brokers owe a "fiduciary duty" to borrowers. It would have prohibited brokers from steering borrowers toward higher risk loans than they would qualify for based on their income and credit. And it would have capped prepayment penalties for borrowers who want to refinance their loans to seek better terms.

Schwarzenegger, in his veto message, said the bill had laudable goals but that it "overreaches and may have unintended consequences."

Overreaches into the profits of his mortgage lending industry buddies, that is. Schwarzenegger's concerns about putting state mortgage brokers at a "competitive disadvantage" compared to their unregulated federal counterparts is easily managed (like forcing anyone who does business in the state to work under one standard) and just a pathetic excuse.

We are in crisis mode on Wall Street right now because mortgage lenders, pressured by investment banks and securities markets, abused the process and came up with all sorts of exotic schemes to get borrowers into homes. This bill would have curbed the worst practices of the industry. The Governor would rather they continue. He would rather mortgage lenders rip off their customers. He would rather the economy sink into a deep recession.

One unexamined aspect of the Governor's character is how much of a mindless puppet he is for Chamber of Commerce interests. Let this be another example.

Pass AB1830 To Help Fix The Financial Crisis

The big story today continues to be the Bush/Paulson bailout bill, which is now being debated on Capitol Hill. In calling my representatives yesterday, Rep. Waxman seemed very wary of giving away $700 billion dollars to the Treasury Dept. without oversight or judicial review. Sen. Boxer's statement still buys into the "need for speed" that is accelerating this legislation in an effort to sneak through something very bad, but she does hit the real genesis of the crisis.

In addition, we must get to the root of the housing crisis and work to keep people in their homes through refinancing; if we don't, housing prices will continue to freefall and we will still be in a mess.

In California, we have more foreclosures than any other state-in August more than 101,000 Californians received foreclosure notices and more than 33,000 lost their homes.

If the American taxpayers come to the rescue in this financial crisis, you have to provide assurances that they aren't just taking on bad debt and further jeopardizing their future.

The housing crisis is the first mover here. Lenders and financial industry actors had an extreme need to get people into mortgages, no matter their income or ability to pay, and they sweet-talked them into teaser rates and ARMs with no money down and low opening monthly payments. The idea was to accumulate as many mortgages as possible to package them into mortgage-backed securities to sell overseas. It was a bad bet predicated on perpetual growth in the housing market, and when it crashed there was no flight to safety.

The most important protection for taxpayers comes with protection from the types of lending schemes we saw in the housing market, and that starts not just on Wall Street, but in the states. Aggressive regulation of the housing market in California will go very far to protect against such a crisis from happening again. The legislature passed AB1830 to address exactly this issue, and today Asm. Ted Lieu, the author of the bill, writes Governor Schwarzenegger urging him to sign it.

As you have said in advocating for budget reform, "Enough is enough!" Similarly, the past few years have shown the consequences of a system that failed to effectively regulate and reign in the out of control subprime mortgage industry. The laissez-faire policies previously advocated by much of the industry have turned out to be disastrous. As with budget reform, we need effective mortgage reforne. "Enough is enough!"

To much of the industry's credit, many within the industry and Wall Street recognize that they need better regulation. That is why the following major industry institutions (collectively representing thousands of financial institutions) have all gone neutral on this bill and many of them have contacted your office asking you to sign this bill: The California Bankers Association, California Mortgage Bankers Association, California Independent Bankers, California Credit Union League, and the California Financial Services Association [...]

AB 1830 provides consumer protections for subprime loans while maintaining access to credit and homeownership. This carefully crafted bill is the product of dozens and dozens of meetings and discussions with industry and consumer groups over an eight month period. Through our efforts to craft a balanced approach the leading organizations in the financial and banking industry have gone neutral on this bill. Although a minority of groups still oppose, such as the mortgage brokers and realtors, we have taken several of their suggestions and have worked hard to try to accommodate their concerns.

AB1830 would put mortgage brokers themselves on the hook for their predatory practices, imparting to them a fiduciary duty which would subject them to potential civil suits and loss of license were they not to put the economic interest of the borrower first. It would end the practice of yield spread premiums, which actually financially incentivized brokers to put borrowers into riskier and more costly mortgage options. It would prohibit steering prime borrowers into subprime loans, a common practice. It would ban "negative amortization" loans that would cost the borrower more for the loan even after their initial payments. It would increase enforcements, put caps on prepayment penalties, and go very far to prevent the kinds of abuses that led to this crisis in the credit markets.

It's essential to the future of your stock portfolio as well as the future of the state's economic picture to pass AB1830. The Governor should do so as soon as possible.

Mortgage Legislation Passes CA Assembly - What's In It?

Yesterday, the Assembly passed SB 1137, which would alter the mortgage industry in California and aid those in danger of losing their homes. It got through the Assembly by one vote, with 10 Republicans voting with the Democrats. The Senate will need to pass it again to conform to some amendments and then this will go quickly to the Governor's desk. As Frank Russo writes:

The bill that passed, SB 1137 is authored by Democratic Senators Don Perata, Ellen Corbett, and Michael Machado, and coauthored by Speaker of the Assembly Karen Bass and principal coauthor Assemblymember Ted Lieu, who presented it on the Assembly floor. It goes beyond federal laws and received broad support from consumer groups. The legislation requires lenders and servicers to: 1) contact borrowers (or engage in a prescribed process to do so) to schedule telephone or in-person meetings on restructuring options before beginning the foreclosure process, 2) requires a 60-day notice to be given to tenants of buildings facing foreclosure before they can be removed from a rental housing unit; and 3) allows fines of up to $1,000 a day for owners of foreclosed properties that fail to adequately maintain them.

I like aspects of this legislation, particularly the steps toward removing blight in homes that aren't properly maintained, which is a big problem in heavily foreclosed areas. But this bill is a watered-down supplement to the raft of bills presented by Ted Lieu earlier this year, which would have really reformed the mortgage market. There would have been enhanced regulation, limits to penalties for prepayment, a requirement to translate loan terms to non-English speaking customers (yes, that's not current law), eliminate yield spread premiums (which rewarded lenders for getting their customers into higher interest-rate loans) and gotten rid of weasel language in mortgage documents like involuntary legal waivers. Almost all of those bills were gutted to the delight of the lending industry. What's in its place is vaguely helpful to borrowers, but not at all the industrywide reform that is needed to ensure that a runaway market like we saw a few years ago will never be repeated. Lieu modeled his reforms after those in North Carolina, where they work very well. This was a case of the lobbyists getting a hold of legislation before it could actually do any good.

Here's Ted Lieu's statement:

“Senator Don Perata’s SB 1137 sends a strong message that the California State Legislature will go further than federal law to address the mortgage foreclosure crisis. Recently and unfortunately, the Senate Banking, Finance and Insurance committee killed a comprehensive package of Assembly mortgage reform bills based on industry’s argument that California should do nothing other than conform to federal law. SB 1137 is a clear and stunning rejection of the ultra-conservative industry argument that California has no role other than to follow the federal government. This bill shows we will lead, not just follow, and that relying on the same federal regulators that failed us during the mortgage crisis is not an option.

“California was the hardest hit and therefore needs to be at the forefront of creating such a comprehensive plan. Such states as New York and North Carolina have already passed comprehensive mortgage reform. It is time we do more.

“Again, I would like to commend Pro Tem Perata on his recognition that sensible mortgage reform requires California to go further than federal law. SB 1137 is a solid first step, but we certainly need to do more to address adequately the mortgage crisis. The Assembly already passed a solid package of comprehensive reforms to the Senate. The ball is now in the California Senate’s court.”

Sen. Mike Machado was instrumental in getting industry's back and gutting the most far-reaching aspects of the Lieu bills, and Democrats in the Assembly gave some payback by killing most of the legislation he offered this year. Rather than an elementary school slap-fight, it'd be nice if there was some conviction from the leadership to go beyond the most cosmetic solutions and fight for their constituents.

The Money Goes In, The Favors Go Out

This article by Frank Russo got me pretty depressed about the state of California politics.

There’s something amiss in the state of Sacramento—and it has something to do with the state’s banking and lending institutions and the stacking of committees that deal with them with legislators that are either weak kneed or just a bit overfriendly with the industry that they should be protecting us from.

What else is new?

Well, this afternoon, the Senate Committee on Banking, Finance, and Insurance, Chaired by Senator Michael Machado of Stockton, will be hearing two bills that have been gutted down behind a closed door process such that today’s public proceedings on them may amount to little more than a sham [...]

It’s difficult enough to get bills passed through the Assembly Banking Committee and the Assembly floor when going up against the behemoth banking industry which has a lot of spare change to throw around in legislative races and many high paid lobbyists scurrying about the Capitol.

It looks like AB 69 by Assemblymember Ted Lieu, originally a great bill, has been amended since it left the Assembly—and before today’s hearing—such that the Center for Responsible Lending, a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices, initially listed in support, has withdrawn that position.

Read the whole thing. The bottom line is that in this recent primary election special interest groups spent nearly $10 million, and a good bulk of them were business interests who are now playing inside Democratic primaries in traditionally liberal areas to sell low-information voters a bill of goods. This doesn't always work, but it works just enough to frustrate progress in Sacramento.

Lesson 3: The business lobby can influence Democratic politics, even in a largely minority district.

Former Assemblyman Rod Wright, a moderate, defeated liberal Assemblyman Mervyn Dymally -- reversing the pattern of leftist victories -- in a South Los Angeles Senate district after business donors invested roughly $1 million in Wright's campaign.

"Business has tended to stay out of black politics," says Sragow, who advises the business lobby. "But some black politicians ask, 'Why? We're always out looking for economic development in our districts.'

"The business community has decided it can't get a Republican Legislature, so it will play in districts where there's a Democratic candidate it can work with."

A major Democratic strategist has all but said that Don Perata shepherded along the candidacy of Rod Wright, and actually put it in terms that come very close to illegal coordination (note "a flurry of record spending by closely-aligned IE groups focusing all of their attention and ammo in one, concerted direction.")

This is the game. IE's are increasingly the only way to reach the electorate, as the low-dollar revolution has pretty much not reached the Golden State. So the Chamber of Commerce and industry groups fill the pockets of the politicians who, once elected, feel obligated to repay them. The US Constitution allows the right for anyone to petition their government for redress of grievances; outlawing lobbyists or the ability of merchants to consult their politicians is not tenable. What is tenable is to either create a parallel public financing system by employing the residents of the state to pay attention to local politics enough to fund progressive-minded candidates, or to bring clean money to California, where it's arguably needed more than anywhere else, and end the pernicious influence of special interests in state elections. Otherwise, you get a steady parade of mortgage relief bills that offer no relief.

The California Report

I have a focus on California politics, as you may know. Here are some links that I've picked up along the way this week:

• Assemblymember and former Banking Committee Chair Ted Lieu had a good piece yesterday on the foreclosure crisis and how continuing a laissez-faire attitude toward a deregulated lending industry is a recipe for even more disaster. AB 1830 is the vehicle to crack down on irresponsible lenders and ban risky loans.

• Steve Wiegand writes about the circuitous route the Governor has taken this year, first toward fiscal austerity, then toward revenue enhancement, and everywhere in between. Schwarzenegger is completely squeezed, knowing his legacy and reputation is on the line and at his wit's end over how to bridge the chasm between Republican intransigence and a way forward for California.

• The California Labor Fed has released its endorsements for legislative races. Not a lot of surprises here, nor a lot of variance from the CDP endorsements, although Carole Migden and Bob Blumenfield didn't see their endorsements vacated on the convention floor. The Labor Fed can endorse multiple candidates in one race, which allows them to wiggle out of some of the more contested primaries (in AD-14 they actually had a TRIPLE endorsement). The Labor Fed does bring member education, and in some cases money and volunteers, so it's not a little thing.

• Wired's Autopia looks at LA's future in mobility. In a word, I would call the report frustrating. It's basically going to take forever until the city truly has the transit system it deserves; right now, just 7% of the city uses mass transit.

• Mayor Villaraigosa takes a strong stand against ICE raids.

"I am concerned that ICE enforcement actions are creating an impression that this region is somehow less hospitable to these critical businesses than other regions," Villaraigosa wrote in a March 27 letter to Michael Chertoff, secretary of the Department of Homeland Security [...]

In his letter, Villaraigosa said ICE has targeted "established, responsible employers" in industries that have a "significant reliance on workforces that include undocumented immigrants."

"In these industries, including most areas of manufacturing, even the most scrupulous and responsible employers have no choice but to rely on workers whose documentation, while facially valid, may raise questions about their lawful presence," he wrote. He said ICE should spend its limited resources targeting employers who exploit wage and hour laws.

"At a time when we are facing an economic downturn and gang violence at epidemic levels, the federal government should focus its resources on deporting criminal gang members rather than targeting legitimate businesses," said Matt Szabo, the mayor's spokesman.

In general I agree with worksite rules enforcement, but the issue does seem to be out of proportion and balance. It's selective.

• This is a really interesting and refreshingly honest article by Brad Plumer on the SEIU/UHW situation.