Justice’s top negotiator trying to navigate the mortgage debacle and strike a deal

(Alex Wong/GETTY IMAGES) - Associate Attorney General Thomas J. Perrelli has spent a great deal of time in talks with banks for a settlement over widespread problems within the mortgage-servicing industry.

The number of issues that cross Associate Attorney General Thomas J. Perrelli’s desk on any given day run the gamut from civil rights to the environment, from antitrust cases to questions about law on Native American lands.

But recently, the man who oversees the civil side of the Justice Department — an operation that includes thousands of federal lawyers — has spent a sizeable chunk of his time trying to forge a deal that could affect homeowners throughout the country.

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Perrelli, the department’s No. 3 official and one of the Obama administration’s top negotiators, is the government’s point person in talks with the country’s largest banks over a massive settlement stemming from widespread problems within the mortgage-servicing industry.

Those problems surfaced nationally last fall. The scandal, which included instances of forged foreclosure documents, flawed paperwork and woeful customer service, prompted nearly a dozen federal agencies and 50 state attorneys general to join forces against the industry’s largest players.

Perrelli and Iowa attorney general Tom Miller have tried to hold together that sprawling coalition while also trying to force firms such as Bank of America and Wells Fargo to overhaul their servicing practices and set aside tens of billions of dollars in penalties that could be used to aid troubled borrowers.

The outcome remains far from certain, but Perrelli said bringing closure to the issue ultimately could help heal the ailing economy.

“My focus has really been working toward a coordinated, comprehensive resolution,” he said, because “the housing market is an extraordinarily important part of the economy, and this set of issues has been one fact in stalling that market.”

If state and federal regulators don’t remain united and instead seek individual settlements, he said, “the problems in the marketplace will persist” and uncertainty will linger. “So I think this is an area where broad-based resolution has a lot of merit.”

It’s an issue to which Perrelli, whose division oversees tens of thousands of cases on varied topics, has dedicated a substantial amount of personal attention. “You have to pick and choose what you devote your time to,” he said. “And I’ve chosen to take on a series of very large and complicated matters and try to bring them to resolution.”

He has a history of doing just that.

After the Gulf of Mexico oil spill, Perrelli negotiated the agreement that led BP to set up an independent claims process and set aside $20 billion to aid individuals and businesses harmed by the accident. He since has led the administration’s efforts to ensure that BP follows through, and he has pushed the fund’s administrator, attorney Kenneth R. Feinberg, to improve transparency and accountability of the claims process.

Even with the occasional criticism from Perrelli, Feinberg said he respects how the 45-year-old Virginia native handled the disaster.

“He has praised the program when it deserved praise; he has not hesitated to criticize the program when it needed improvement,” Feinberg said. “He has been absolutely steadfast, determined, and I think really a dedicated public servant. He’s in the crosshairs of some of the most difficult problems confronting the country. I have only the highest admiration for him.”

Perrelli has spent much of his career inside the walls of the Justice Department. He began as an 18-year-old computer programming intern, one of several internships he had at the agency.

“I wasn’t even sure I was going to go to law school,” he said.

He did, of course, ending up at Harvard and befriending a young Barack Obama. When Obama served as president of the Harvard Law Review, Perrelli was its managing editor.

During the Clinton administration, he served as a senior official under attorney general Janet Reno, working on issues as varied as Indian Country law to defending federal laws and government policies against legal challenges.

He returned to private practice during the George W. Bush administration, working in Washington for the Chicago-based law firm Jenner & Block and often representing record companies and motion-picture studios in intellectual property fights.

Perrelli also represented the husband of Terri Schiavo, a Florida woman who for years had existed on life support. The case triggered a nationwide debate over whether her feeding tube should be removed, as her husband said she would want. Her parents insisted she be kept alive. Judges ultimately ruled in favor of Schiavo, but the Florida legislature and Congress stepped in with emergency legislation to aid the parents in their efforts to overturn the ruling.

The case won Perrelli few fans among conservatives and right-to-life advocates, but it didn’t hinder his return to the Justice Department when Obama won the White House. Perrelli, who raised hundreds of thousands of dollars for his law-school friend, was appointed to his current position in early 2009 and sailed through Senate confirmation.

Over the past two years, he has carved out time for issues that seldom garner headlines, such as promoting awareness of violence against women. But the big cases keep coming, and Perrelli keeps finding himself at the negotiating table.

“He’s bright and capable and has great judgment,” said Miller, Iowa’s attorney general and Perrelli’s negotiating partner in the foreclosure settlement. “Tom and I really do see eye to eye on the policy questions and on the strategy questions.”

But they both know that with so much money at stake and stiff opposition from the banks to some proposed changes — such as lowering the balance on some loans — nothing is guaranteed.

“Ask me that question if it happens, when it happens,” Perrelli said when asked if he was confident about reaching a settlement.

In the lobby, representatives from banks were waiting for yet another meeting, just under a framed portrait of former attorney general Robert F. Kennedy.

“The big task has been to pull everybody together and try to resolve this,” Perrelli said. “I’m not going to make any predictions on what it will look like or whether it will occur. There are a lot of moving parts.”

 
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