NEW YORK -- The nation's attorneys general flexed their legal muscles earlier this year when they signed off on a $25 billion national mortgage settlement. Often overlooked in the commotion of the presidential contest, attorney general races in 10 states this year will decide who continues the work, at least at the state level, of investigating banks for financial misdeeds.
The campaigns could also serve as litmus tests of voter anger at corporate greed.
Over the past two years, it was the investigations opened by state attorneys general that pushed the federal government toward crafting the national settlement.
"The power is enormous -- if it's used well," said Rick Jacobs, founder and chair of the Courage Campaign, a progressive advocacy group that has been pushing for tougher home lending regulations in California.
None of the top prosecutors in the states where foreclosure has hit the hardest, including Florida and Nevada, are up for election in 2012. But voters in Indiana, Missouri, Montana, North Carolina, Oregon, Pennsylvania, Utah, Vermont, Washington state and West Virginia all will have their say.
So far, candidates in only a handful of states, and apparently only Democrats, have pushed the argument that banks still have something to answer for. Republican candidates in many states have put rhetorical emphasis instead on their support for the 26-state lawsuit against President Barack Obama's Affordable Care Act. Banks are biding their time for now, but at least one academic observer expects a last-minute flurry of campaign donations.
Bob Ferguson, the Democratic nominee for attorney general in Washington state, said he was running, in part, "to hold powerful interests accountable who don't play by the rules. The average person can't hire an attorney to fight those banks. They have the attorney general."
"It's been a central message to our campaign from day one," Ferguson said.
Other candidates, whether because they view the national agreement as settling the matter or because they consider it a lower priority, have remained silent on the foreclosure crisis. The campaign of Ferguson's GOP opponent, Reagan Dunn, did not return a request for comment. One prospective Republican candidate, when contacted by The Huffington Post, seemed unaware that there had been a mortgage settlement.
In Montana, Democratic candidate Pam Bucy said her Republican opponents are focusing more on defying Obama than on protecting consumers. "They're campaigning on issues that don't have a lot to do with the AG's office," she said.
To understand what a state's top prosecutor can do, Jacobs said, "You have but to look at the attorneys general of Delaware and New York and California to start with, in the 49-state mortgage settlement."
During the long, fraught negotiations over the settlement, those three Democrats -- Beau Biden of Delaware, Eric Schneiderman of New York, and Kamala Harris of California -- pushed for a tougher line against the major banks over alleged mortgage fraud. At one point last September, Harris withdrew from the talks to try to obtain better terms for her state. The efforts of all three put pressure on the banks and on the federal government, which led the talks, to agree to terms more advantageous to homeowners.
Other attorneys general, who are elected by the voters in 43 states, took a less confrontational stance. Scott Pruitt of Oklahoma, who leads the Republican Attorneys General Association, pursued his own, separate settlement over concerns that the Obama administration was overreaching in its efforts to reduce homeowners' principal.
Pruitt preferred a focus, he told the Associated Press, that was more "myopic."
In Pennsylvania, where 4,286 properties started the foreclosure process in April according to the data service RealtyTrac, voters are talking about the foreclosure crisis, according to Kathleen Kane, a former assistant district attorney who is the Democratic nominee for attorney general.
"People are angry that they've been defrauded and that they're the ones left holding the bag," Kane said. "It appears that what was done was criminal, and somebody needs to look at that."
Democrats in the Pennsylvania legislature proposed using some of the state's $66.5 million in settlement money to stave off cuts to social services. Fifteen of 27 states that have made decisions on their mortgage fraud cash have used it for purposes other than foreclosure.
But Kane said that approach would be "robbing Peter to pay Paul. The money coming in from the settlement is meant to alleviate the burden on homeowners and those who are suffering because of the financial crisis."
Kane's Republican opponent, Cumberland County District Attorney David Freed, has remained mostly silent on foreclosures, preferring to highlight the job's other functions with press releases about a $10 million drug bust and an endorsement from the state troopers' association.
Discussing the limits of the mortgage settlement with voters would not be a winning electoral strategy, said James Tierney, director of the National State Attorneys General Program at Columbia Law School. The settlement is "mind-numbingly complex. Can't be explained to anyone," he said, noting that it drew only a few days' attention in the press.
Tierney does believe housing policy could be improved by focusing on "the behavior of lenders in general," but does not think that will happen this year. Instead, he suspects that the politics of the mortgage settlement will play out behind closed doors and through campaign contributions.
"The corporations, they're the ones who remember," Tierney said. "I expect the financial community to be active in AG races."
Mortgage lenders are still leery of further actions by attorneys general. The settlement closed off many avenues for investigation of financial misdeeds. But the top prosecutors in at least two states are probing whether banks misled investors when they failed to package mortgages into bonds as promised.
So far, three Democratic sources told The Huffington Post, they have yet to see financial institutions open the donation floodgates in attorney general races. But for such positions, which are lower-profile than governors or senators, donors may be waiting until the last weeks of the campaign to fund perception-defining television or radio ads. They also have a different avenue of attack: state lawmakers.
In California, Attorney General Harris is leading a fight to make permanent the settlement's lending reforms, which will now expire in 2015, by writing them into state law. Bank of America, Citigroup, JPMorgan Chase and Wells Fargo are all furiously fighting her proposal, spending $500,000 lobbying in California in just the first three months of this year. They have also poured money into the campaigns of the state legislators who will decide its fate.
Despite the Democratic Party's generally tougher rhetoric on financial regulation, Jacobs of the Courage Campaign said that many of the recipients of those donations are Democrats. Jacobs' group recently unveiled a website highlighting key legislators who have received bank money. Banks, he said, are far from chastened.
"How bizarre is it that any legislator in California, or frankly anywhere at this point, is listening to JPMorgan Chase or any other supernational bank about regulation?" Jacobs asked.
"Bank money plays a huge, huge role," he said, "and our side, the homeowners' side, just doesn't have those resources."