An impromptu phone call between then-California attorney general Kamala Harris and JPMorgan Chase CEO Jamie Dimon almost immediately turned into an altercation.
“We were like two dogs fighting,” Harris recalled in his 2019 autobiography, The Truths We Hold: An American Journey.
The two men clashed over a deal proposed by major Wall Street banks in negotiations with a consortium of state attorneys general to help homeowners who were foreclosed on during the Great Financial Crisis. The banks, including Wells Fargo, Bank of America and JPMorgan Chase, among others, offered between $2 billion and $4 billion in compensation for California alone. Harris called that amount insufficient, and the banks ultimately increased their offer by nearly tenfold.
“During the foreclosure crisis, I took on the big Wall Street banks and won $20 billion for California families,” Harris said in a campaign speech Monday, touting that achievement.
In her book, she describes in more detail the crucial, if tense, conversation with Dimon. Frustrated that she hadn’t made much progress in working with JPMorgan’s general counsel, Harris opted to call Dimon, one of Wall Street’s most respected CEOs, directly, according to her autobiography. As Harris recounted, 10 seconds later, the two were on the phone, tempers flaring.
“You’re trying to steal from my shareholders,” (Dimon) shouted almost as soon as he heard my voice,” Harris wrote. To which Harris, indignant, responded, “Your shareholders? My shareholders are the owners of California. Come to them. Tell them about the people who were stolen.”
The talks remained heated until Dimon told Harris he would discuss the issue with his board. Two weeks later, Harris said, the banks increased their offer nearly tenfold, offering California a deal that would ultimately result in $20 billion in aid for homeowners.
“I’ll never know what happened on Dimon’s side,” Harris said. “But I do know that two weeks later, the banks caved.”
Harris and American Business (Re)Meet
More than a decade later, California is the epicenter of the nation’s housing crisis, and Harris is the incumbent vice president and the presumptive Democratic presidential nominee. She won the endorsement of President Joe Biden on Sunday, after he announced that he would not seek a second term. California’s housing crisis was escalating well before the Great Financial Crisis, but since then, construction has collapsed everywhere; the state’s home prices and rents are far higher than national averages, and it’s home to the nation’s largest homeless population. But for Harris, this ordeal is a testament to how she’s created a solution to the country’s most intractable housing market, and in the state where it’s most acute, no less. And it’s also a testament to her approach to working with the business community, albeit a controversial one in this case.
Since his fiery phone call with Dimon in 2011, the two men have tried to build a productive relationship. They had lunch at the White House in March, as first reported by The Financial Times. At the time, the Biden administration’s relationship with corporate America was strained. The president had called for higher corporate taxes and taken an extremely tough stance on antitrust enforcement. Harris has in the past been much friendlier to corporate America than other Democratic politicians, even calling Google “family.” In recent weeks, rumors have swirled that she is courting CEOs, hoping they will turn away from Trump’s unorthodox economic and trade policies.
Harris also tapped senior executives when she felt they could help her achieve her policy goals. For example, in 2021, when the Biden administration was distributing pandemic relief loans, she called the CEOs of major banks, including Dimon, to see if they could get them to low-income borrowers more quickly, according to Bloomberg.
But as the settlement with the landlords proves, it does not spare big business when it comes to enforcing the law, although Los Angeles Times She has already suggested that her handling of the settlement was not perfect because the bankers escaped criminal prosecution.
From 4 to 20 billion dollars
It was risky lending practices that fueled the subprime mortgage crisis, which later led to what we now know as the Great Financial Crisis. Home foreclosures skyrocketed in 2008, and more than 861,000 families lost their homes, CNN reported at the time. That same year, more than 236,000 homes were foreclosed on in California alone, according to the report. Los Angeles Times.
The deal Harris negotiated was supposed to provide much-needed relief to homeowners hit by the crisis. At one point during the negotiations, Harris walked away from the talks altogether, frustrated by the banks’ paltry offer. That decision paid off when she eventually negotiated a separate deal for California; in 2012, the banks offered the state $18.4 billion in debt relief and $2 billion in other financial assistance.
“This outcome is the result of an insistence that California receive fair treatment, commensurate with the harm suffered here,” Harris said at the time, according to a statement released the day of the settlement. “We insisted on relief for California homeowners and demanded that the law be enforceable so that homeowners actually see a benefit that will allow them to stay in their homes, and we preserved our ability to investigate banking crimes and predatory lending.”
Under the terms of the deal, homeowners could either reduce their monthly mortgage payments or sell their homes for less than what they owed the bank, forcing the banks to take losses. Far more Californians than expected opted for the latter option, which critics said fell short of the spirit of the deal, which was to help people stay in their homes, not sell them. In a 2016 interview with The Los Angeles Times, Harris said the unexpected outcome was a result of broader economic hardship caused by the housing crisis.
“There were a lot of homeowners who just didn’t want to carry the burden of debt because they had also lost their jobs,” she said.