In September 2011, some of the nation’s biggest banks were about to sign a $4 billion legal settlement with regulators for improperly foreclosing on homeowners. But Kamala Harris, the attorney general of California, felt it didn’t do nearly enough to help her constituents. She told lawyers for JPMorgan Chase and Bank of America that if the banks didn’t raise their offer, she would walk. And when they balked, she did.
Her hardball tactics eventually helped secure an $18 billion settlement for Californians.
The case — and, more broadly, Ms. Harris’s six-year stint as attorney general — provides a primer on her approach to dealing with malfeasance in business and finance that could be relevant if she becomes vice president.
As California’s top lawyer, she didn’t often go after big business unless the potential impact on residents was strong, highlighting her pragmatism and politician’s knack for recognizing winning issues. The approach produced mixed results: While her victory in the deal later known as the national mortgage settlement was substantial, her achievements in taking on other big companies were more modest.
She chose not to pursue a case against Herbalife, the nutritional-supplement company that was accused of running a pyramid scheme, and approved an oil-industry merger that reduced refining competition in California, which some consumer activists say contributed to price spikes at the pump. Much of her focus was on issues like elementary school truancy, same-sex marriage rights and consumer privacy.
Brian Nelson, one of Ms. Harris’s top lieutenants in the attorney general’s office and a volunteer policy adviser on her presidential campaign, said that in selecting cases, she was keen to address her constituents’ “lived experience,” rather than focusing on high-value targets that seemed compelling in theory but might have a limited effect on day-to-day life.
“I think her perspective was really, ‘How do I deploy these resources in a way that is making impact?’” Mr. Nelson said.
‘I Am a Capitalist’
President Trump has depicted Ms. Harris as an extreme liberal, as has a recent study of her Senate record. But she had a centrist reputation as attorney general and as San Francisco’s district attorney, sometimes exasperating critics on the left.
During this election cycle — as a presidential candidate in the primary and now as Joseph R. Biden Jr.’s running mate — Ms. Harris has presented herself to businesspeople as a middle-of-the-road choice who isn’t planning to raze their business models or rip up the tax code overnight, as many feared two of her rivals in the presidential primary, Senators Elizabeth Warren and Bernie Sanders, would. On Wall Street, her selection has largely been viewed with relief.
“Let me be clear,” three corporate donors recall Ms. Harris saying at fund-raisers earlier in the race. “I am a capitalist.”
Her economic policy advisers have included Raymond J. McGuire, a longtime banking executive at Citi — one of the banks she challenged as part of the 2012 mortgage settlement — who recently started a run for New York City mayor, and Glenn Hutchins, co-founder of the Silicon Valley private-equity investor Silver Lake. Her biggest donors included Donna Langley, chair of NBCUniversal’s film studio; Brad Karp, who as chairman of the law firm Paul Weiss has represented nearly all the major banks and private-equity firms; and Reid Hoffman, a co-founder of LinkedIn.
A Missed Opportunity
As attorney general, Ms. Harris went after businesses occasionally, suing eBay in 2012 over anticompetitive hiring practices as part of a “no-poach” arrangement with Intuit, a case that ended two years later with a $3.75 million settlement. She sued Delta Air Lines over a mobile app that gathered personal information about fliers but lacked a consumer privacy policy. A judge dismissed that case because of a federal law that bars states from suing airlines over certain issues.
But flashy corporate prosecutions were rare, even as the federal government sued Facebook over privacy violations (and fined it billions later for violating an order). Part of that reticence was Ms. Harris’s push to curb pornography on social media, noted Danielle Keats Citron, an adviser on the issue, which required the cooperation of tech companies like Twitter and Google.
In March 2015, lawyers in the consumer law division sought Ms. Harris’s blessing to send subpoenas to Herbalife, a multilevel marketing company based in Los Angeles that relied on large networks of salespeople known as “distributors” to sell nutritional products. The lawyers suspected Herbalife of violating a 1986 state order barring misleading claims about the health benefits of its products or about the moneymaking opportunities associated with selling them.
At the time, two prominent Wall Street investors had taken opposite positions on the company: the hedge fund manager William Ackman, who had called Herbalife a pyramid scheme and bet that its shares would fall to zero, and Carl Icahn, the onetime corporate raider who had a significant stake in the company.
Herbalife was a client of Venable, the law firm where Ms. Harris’s new husband, Doug Emhoff, was a senior partner. Although Mr. Emhoff hadn’t personally represented Herbalife, his firm had billed it for 7.6 hours only a month before Ms. Harris received her team’s request to investigate Herbalife. (Senior staff members from the time say that a conflict review system was put in place in 2014, when Ms. Harris and Mr. Emhoff married, and that the review found no issues with Ms. Harris’s involvement in the Herbalife discussions.)
Ms. Harris told her team to study the matter, but to avoid making requests for information that Herbalife would have to disclose publicly — a move that might affect the company’s share price.
“We need to find out if Herbalife has violated the law,” a former senior lieutenant, Nathan Barankin, recalled Ms. Harris saying, “but we should not go about our business of figuring that out in a way where we are being used to make one billionaire richer than another one.”
Her office met with consumers who said the company had deceived them, but ultimately the lawyers came to believe that the 1986 state order contained too many loopholes to make a successful case, said two aides to Ms. Harris from that time.
Other Herbalife investigations continued. In 2016, the Federal Trade Commission won an injunction barring the marketer from making deceptive claims about distributors income opportunities. In 2019, the Securities and Exchange Commission won a $20 million settlement related to false claims about Herbalife’s Chinese operations. And this past summer, the Justice Department announced a deferred-prosecution agreement in which the company admitted to corrupt business practices in China.
Prices at the Pump
In 2012, the British oil driller BP announced plans to sell a Los Angeles area refinery and 800 Arco gas stations in California and two other states to Tesoro, the San Antonio-based refining company. Consumer activists opposed the $2.4 billion deal, saying it could spark a price hike for California motorists by reducing refining capacity in the state.
Ms. Harris and the F.T.C. — which had concluded that combining a Tesoro refinery in Wilmington, Calif., with the BP refinery in nearby Carson was unlikely to raise prices — both approved the deal. Ms. Harris extracted commitments that the Arco chain would continue to sell lower-cost gas, and that the refineries would reduce their greenhouse-gas emissions.
The price of regular unleaded gas in California fell in the years that followed. But temporary spikes piqued concerns. During the summer of 2015, with gas prices pushing toward $4, the advocacy group Consumer Watchdog wrote to Ms. Harris with an analysis showing that refiners were routinely jacking up prices by 30 cents or more per gallon. No response was apparent until a year later, when Ms. Harris, running for the Senate, subpoenaed Tesoro and other major oil companies for information on gas pricing.
She left the attorney general’s office six months later, and the status of that investigation is unclear.
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