Article: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/02/09/BUDS1N4O2A.DTL "Kamala Harris has key role in mortgage settlement" by Andrew S. Ross Feb. 10, 2012
This article explains Harris' rationale for accepting the settlement. In addition to prominsing a significantly greater amount of money than the previous offer brokered by the Obama administration, CA gained several key concessions. The "California commitment" ensures that banks failing to enact "agreed-upon principle reductions face heavy fines in state court." The article mentions that this CA-specific commitment includes an immediate focus on relief "for the state's hardest-hit areas, like Stockton." According to Harris, this "California commitment" will avoid a repeat of what happened after the nationwide settlement with Countrywide where CA homeowners "never saw a dime" (as the article states). Exclusion of the banks from the degree of immunity "typical in such settlements" means that "pension funds like the California Public Employees' Retirement System can sue for treble damages if mortgage-backed securities they have invested in were falsely packaged and dropped in value.
This last point may be especially key, as the budget crisis in California is typically spoken of in terms of blaming unions. If the scandalous practices of the securities peddlers are exposed, California may avoid a Wisconsin-like scenario of gutting unions and attacking benefits such as pensions. People might wake up and realize that the true blame lies with those who promised endless economic growth and were not operating in good faith with those they involved in their schemes. We have already seen the devastating impact the crisis has had on counties and municipalities around the country. California, with its massive economy and being the worst hit by the foreclosure crisis, cannot allow the blame to be placed on unions when it was the financial services industry that has been exposed as harboring a range of behavior including the criminal and the fraudulent; I'm sure we can all remember the stories of leaked memos exposing the fact that those selling securities knew they were bunk, and that those in the loop in the financial services industry exploited their inside knowledge for their personal gain. It would be a travesty of democracy if this kind of activity were to result in the collapse of the economy.