Finding her voice
After her devastating Senate defeat, Martha Coakley is back
Attorney General Martha Coakley at a financial literacy workshop at
Martha Coakley has a cold.
The attorney general apologized for this fact as she took the stage to address a group of Boston business honchos, popped a couple cough drops into her mouth, and joked that if the audience hit her with a particularly difficult question, her voice might give out altogether. It didn’t. But that’s not really the point. Coakley isn’t a speaker who’s going to be hobbled by a cold virus, because Coakley’s voice, even at full strength, will seldom set a room on fire.
The state’s top lawyer works in an industry where the facts of what she says matter, not how they’re delivered. And besides, the Chamber of Commerce audience listening to Coakley on this windy January morning was unlikely to get whipped up into a religious fervor, scratchy voice or no. Coakley was delivering a stubborn message to a room full of suits, forcefully defending her decision to sue Bank of America, which was sponsoring her speech.
Publicly, Bank of America insisted that Coakley’s lawsuit would hold back an economic recovery. Ally made a show of shuttering its business in Massachusetts. A Wall Street Journal editorial accused Coakley of using the lawsuit to grab a national spotlight and rehabilitate her public image, which had been badly tarnished during her disastrous 2010 run for the US Senate. The reaction at the business breakfast was lukewarm.
Popular or not, the lawsuit shifted the balance of power in the nationwide foreclosure talks. The day the suit was filed in Suffolk Superior Court, calls from other state attorneys general came pouring into Coakley’s office. Other states had been voicing skepticism about the foreclosure settlement, but before Coakley filed suit, the states had no leverage to fight the banks’ demands. The Massachusetts lawsuit gave states a template for filing their own complaints. Faced with the prospect of fighting off dozens of different state foreclosure lawsuits, the banks began yielding at the negotiating table. Three weeks after her Chamber of Commerce speech, Coakley joined 48 other states in signing on to a $25 billion foreclosure settlement.
It’s telling that the Wall Street Journal saw Coakley’s foreclosure lawsuit as a tool for advancing her political career, since that implies Coakley has a political career to advance. Two years ago, it didn’t appear that would be the case. The Attorney General had stumbled badly in her bid to fill Ted Kennedy’s Senate seat. She blew a 31-point lead over a no-name state legislator, and cost her party its filibuster-proof majority in the Senate. Her advisers feared intense criticism from her fellow Democrats would destroy her politically.
Coakley responded to defeat by going back to her work. In so doing, she has become a national force on housing policy, health care, and gay rights. And that has Beacon Hill observers wondering aloud about Coakley’s next move, speculating that she may be a contender to run for governor. For her part, Coakley says she hasn’t given any thought to her next move, if she has one at all. But the fact that the Corner Office is even up for discussion shows how far she’s come from her January 2010 lows.
“She has been able to accomplish much more in the past two years as attorney general than anyone could as a US Senator,” says Democratic fundraiser Cheryl Cronin. “I’m not surprised at how she handled defeat, but I’m impressed. A lot of us don’t have that same type of resilience. I would’ve gone and sat in a closet for months. She picked herself right up.”
A “guarded politron”
The public recrimination began weeks before Election Day. It started with whispers—on background, no names attached—that Martha Coakley had lost her grip on the Senate race. The tighter the race got, the louder the complaints became. They called her complacent and incompetent. Boston Globe columnist Joan Vennochi chided “a campaign lacking in soul and a candidate lacking in heart.” Boston magazine described her as a “guarded politron.”
|Coakley’s foreclosure lawsuit shifted the balance of power in the talks with banks.|
“She ran a great campaign for five and a half months, and then she had a horrible two weeks,” says Kevin Conroy, Coakley’s Senate campaign manager, and a former top aide in the attorney general’s office.
Coakley’s opponent, Scott Brown, a little known Republican state senator, thoroughly outhustled her. She didn’t challenge Brown when he turned himself into the second coming of JFK. And she could never match the populist everyman persona he projected with his barn coat and pick-up truck. Brown tapped into a vein of anger at the political establishment that Coakley’s handlers never anticipated. The intense scrutiny surrounding the campaign—it was the only race in the country, and the White House’s health care agenda hung in the balance—magnified every misstep. And in the campaign’s last weeks, there were several missteps. Coakley’s campaign huddled in their Charlestown headquarters every night, staring at polling data that showed the race slipping away.
Democrats met certain defeat with their knives drawn. From the state’s all-Democratic congressional delegation, Barney Frank and Richard Neal called Coakley out publicly. Larry Rasky, the prominent Democratic fundraiser and public relations executive, labeled her a “bad candidate” who’d committed “political malpractice.” Coakley’s campaign and the White House were shooting at each other in the national press before the polls even closed.
“You don’t run for office unless you understand that you can lose,” Coakley says, sitting in her offices high above Beacon Hill. “I was surprised at the level of animosity after the race. Whether I should have been or shouldn’t have been, I don’t know. But I was surprised by that. I’m not going to pretend it was easy. But I think I’m pretty tough.”
When Coakley’s friends talk about the Senate race, they invariably complain that Coakley’s private persona didn’t translate in a campaign setting. Cheryl Cronin talks about a woman who is “warm, lovely, and gracious.” Barbara Lee, the Cambridge philanthropist and political activist, recalls an event when, as a gag, Coakley grabbed a lampshade off a table, climbed on stage, and shouted into it like a megaphone. That wasn’t the candidate voters saw. They didn’t see the woman who hands out off-color limericks as birthday presents and gifts to departing staff members. State Sen. Katherine Clark still has hers. “What didn’t come across was how warm a person she is, how funny she is,” Clark says.
“Losing didn’t mean that I wouldn’t be a good attorney general, that I couldn’t do
“The public doesn’t see the AG smiling and laughing often,” says former attorney general Scott Harshbarger. “When people do see you, it’s announcing indictments or settlements. People don’t get to see your more human side. And what the public sees is how they evaluate you.”
On election night, Coakley sat in a Boston hotel room, watching returns roll in with a small group of friends and advisers. By that point, though, they knew where the night was headed. Coakley conceded defeat, pronounced herself “heartbroken,” thanked her supporters, and wished Scott Brown well. She was back at work the next day; the day after that, she was at Gov. Deval Patrick’s State of the State address, surrounded by politicians and reporters who were still dumbfounded by her collapse.
“She came to peace with it,” says Beth Boland, an attorney at Bingham McCutchen who served on the Coakley campaign’s finance committee. “There was sadness and disappointment, but she never once blamed her staff or lashed out at all. She was a total class act. She just went back to work. And she got her sea legs in a really, really strong way.”
“After any loss, people can take one of two routes,” Coakley reasons. “Mine was to say, OK, I lost the race. I didn’t lose my husband. I didn’t lose my leg in the war. I lost a race. Losing didn’t mean that I wouldn’t be a good attorney general, that I couldn’t do my job still. I knew I had to prove that to people, though. That’s the big difference. It wasn’t me, so much—it’s what I knew I had to prove.”
What comes around
National health care reform helped sink Martha Coakley’s Senate campaign. Money and volunteers from across the country flooded into Scott Brown’s campaign offices when Brown pledged to block health care legislation in the Senate. Coakley’s staffers never thought that Brown would be able to turn health care into a legitimate campaign issue, since Massachusetts already mandates universal coverage. That miscalculation imperiled a health care bill that was Ted Kennedy’s legacy.
So when the attorney general arrived at the National Press Club in February of this year to defend the constitutionality of health care reform, she did so with several layers of subtext hanging overhead. Brown failed to derail the legislation on Capitol Hill. Now, two years later, here was Coakley, standing a mile and-a-half from Brown’s new office, acting as the face of the country’s pro-health care reform establishment.
|Coakley joins Rev. Liz Walker at Roxbury Presbyterian Church.|
Coakley sat with CommonWealth for two wide-ranging interviews, and both times she drew bright lines between the “dysfunctional” atmosphere in Washington and the broad leeway she enjoys as attorney general. “I’m glad I’m here, I’m glad I’m attorney general,” she says. “The real reason I run for office is to do the job, to govern, and I get to do that now. I see people in Washington who don’t get to do anything.”
As attorney general, Coakley has broadened her office’s focus. It still plays a traditional role enforcing environmental and wage laws, and prosecuting Medicaid fraud. But the office has also become a serious player in public policy. It used its investigatory arm to compile a report alleging that powerful health care providers have distorted the state’s health care market, netting higher payments for themselves, and driving statewide insurance prices high in the process. The office is employing a similar approach now in the energy arena, using its power to challenge utility rates and to launch a reassessment of the state’s green energy agenda. In both instances, Coakley’s office is using its narrow enforcement authority as a tool for opening up wider, data-driven policy discussions.
Coakley’s activism around the national health care reform law is grounded in a similar approach. At the Press Club, Coakley debated the constitutionality of health care reform with Ken Cuccinelli, the Tea Party-aligned attorney general of Virginia. Coakley filed a Supreme Court brief defending health care reform in January. In it, Coakley echoed the same constitutional arguments—saying that Congress may regulate interstate commerce and pass laws necessary to implement its policy aims—as the health care law’s other advocates. But she went further, arguing that Massachusetts’s experience with overhauling health care, and mandating insurance coverage, proves Congress had a rational reason for passing a nationwide health care mandate. Because Massachusetts’s individual insurance mandate illustrates the outcome Congress was seeking and quantifies its impact, Coakley believes, the Supreme Court will have to uphold health care reform’s constitutionality.
“Our key is to say, it’s not just a theoretical thing,” Coakley says. “Look at Massachusetts. We have 98 percent of our people covered, our free rider care is down 33 percent. You can get up and talk about economic liberty, but what does that mean? Here’s Congress passing a statue, and they’re going to try to overturn it on totally novel, and frankly undocumented, reasons. Which is why the stuff we’ve been able to say about how it works in Massachusetts is important.”
Coakley’s office has also played a large part in pushing the White House to abandon the federal Defense of Marriage Act. Coakley sued the federal government in July 2009, claiming that DOMA, which defines marriage as the union of one man and one woman, violates the Constitution. DOMA attaches itself to any federal regulation dealing with marriage, meaning gay couples who are legally married under Massachusetts laws aren’t married when it comes to federal taxes, Medicare and Medicaid, Social Security, and veterans’ benefits.
Coakley’s DOMA lawsuit followed one filed by Gay and Lesbian Advocates and Defenders, but it challenged DOMA on different grounds. GLAD sued on equal protection grounds, as it did when it forced the legalization of same-sex marriage in Massachusetts. By contrast, Coakley argued that DOMA infringes upon state sovereignty, and said the law forces the state to discriminate against its own citizens when spending federal funds. (In one instance, the Department of Veterans Affairs threatened to rescind funding for a veterans cemetery if the state allowed a gay man to be buried next to his spouse.)
A federal judge in Boston struck down DOMA in both the GLAD case and in the state’s challenge. The two cases are being appealed jointly. Last February, the Department of Justice made a dramatic reversal and said it wouldn’t continue defending DOMA. Justice adopted the arguments advanced by GLAD and by Coakley’s office: It said GLAD’s married plaintiffs were being discriminated against, and that Massachusetts was being required to discriminate against its married citizens. Coakley’s DOMA challenge has been a lonely one: Eight states, along with the District of Columbia, have legalized same-sex marriage, but Massachusetts was the only one to bring its own challenge to DOMA. While Indiana, Michigan, South Carolina, Colorado, and Utah have filed briefs urging the appeals court to reverse the Boston court’s DOMA ruling, no other state has gone on record as supporting Massachusetts’s case.
The day after she sued Bank of America, Citigroup, JP Morgan, Wells Fargo, and Ally, Coakley and her staff traveled to East Boston. Foreclosures have wreaked havoc with the neighborhood’s real estate market. More than 750 families have lost their homes since the beginning of 2007. Home values in the neighborhood have fallen by a third. Last year, East Boston home sales were off their 2005 highs by nearly two-thirds. It’s the sort of neighborhood—working class, and heavily populated by immigrants—that subprime mortgage lenders feasted on. Coakley met with housing advocates who had been trying to secure mortgage modifications from the banks she’d just sued. They were often unable to get anyone on the phone, and when they did, they were told to fax, not email, loan modification paperwork. That paperwork had a habit of getting lost. The longer this runaround lasted, the deeper troubled homeowners sank.
“The banks were just not focused on modifications,” says Conroy, the former aide who helped lead the attorney general office’s foreclosure settlement efforts. “She’s upset the banks were so sloppy, because she’s such a thorough person. But she also now feels a lot of it was deliberate.”
“If any one of those five defendants wants to find you, or find your paperwork, to increase your interest rate on your credit card, or to tell you that you have a $10 fee for checking overdraft, they will find you,” Coakley says. “The banks were saying, sorry, what we do is foreclose—it wasn’t good enough.”
Coakley took office in 2007, just as the housing bubble was coming apart and foreclosures were spiking. Since that time, she’s led “without question the best attorney general’s office on the issues of predatory lending and fighting foreclosures,” argues Max Weinstein, a clinical instructor at Harvard Law School’s Legal Services Center.
Over the past few years, a handful of attorneys general offices have helped steer thorny post-bubble housing policy debates. New York has regulatory leverage over Wall Street. Delaware’s laws govern many of the financial instruments that financed the housing boom. The size of California’s housing market, and the severity of the crash there, make that state part of any discussion. Massachusetts isn’t an obvious candidate to steer national housing policy. The state isn’t large, it’s not a corporate capital, and it has weathered the foreclosure wave better than most states. Massachusetts litigated its way into a leadership position on housing. Coakley brought the first subprime lawsuits in the country, against Fremont Investment & Loan and Option One, and she extracted settlements from Goldman Sachs and Morgan Stanley, investment banks that financed subprime lending. These cases came after the housing bubble had burst, so prohibitions against subprime lending weren’t real remedies; instead, Coakley forced the mortgage companies to modify homeowners’ mortgages. Banks and mortgage lenders committed to foreclosing only as a last resort.
“A lot of other states look at paperwork issues, chain of title issues, and isolated issues of very basic fraud,” Weinstein says. “Faulty paperwork is not what caused the foreclosure crisis. The fact that subprime was designed at the outset to fail, that’s what’s really offensive. She really got it in a way that no other office did.”
In the fall of 2010, the nation’s biggest mortgage banks began suspending foreclosures amid revelations that employees had been signing foreclosure affidavits without reading them first, a practice that’s become known as robo-signing. This was especially problematic in states where judges have to approve banks’ foreclosure requests. Judicial foreclosure states began a joint investigation; their talks with Bank of America, Citigroup, JP Morgan, Wells Fargo, and Ally evolved into settlement talks covering questionable foreclosures across the country. Massachusetts wasn’t part of the initial negotiating group. However, as settlement talks broadened past robo-signing, Coakley became concerned that the banks were offering the states too little relief, while demanding sweeping legal releases related to their conduct during the housing bust. Coakley returned from a briefing on the settlement talks convinced that she needed a seat at the negotiating table, and instructing her mortgage unit to find a way to sue.
“From the initial negotiations, there was no investigation, no discussion of lawsuits,” Conroy says. “When there’s no leverage on your side, you’re really negotiating on thin air. The banks were pushing the AGs to give in. They didn’t have the tools to say, we won’t give in because we’ll sue you.”
As the multi-state talks progressed, the state Supreme Judicial Court handed down a pair of foreclosure rulings that hardened Coakley’s negotiating stance. The SJC said banks couldn’t foreclose on homes without first holding the mortgages tied to the homes, making any foreclosure executed before the proper paperwork was in place invalid. The rulings threw a cloud over the title of tens of thousands of foreclosed homes, including properties that had been subsequently re-sold. Coakley, who was growing wary of the protracted foreclosure settlement talks, made it clear that she couldn’t legally forgive these Massachusetts-specific title defects in the settlement; when the banks tried striking language preserving the state’s right to sue over clouded foreclosure titles, Coakley decided she had to take the banks to court.
“They weren’t sure we had the goods,” Conroy says. “They also thought a Massachusetts lawsuit wouldn’t be a game changer. But it woke people up.” Coakley’s lawsuit emboldened other states critical of the foreclosure settlement. The White House stepped in and knuckled the banks into softening some of their hard-line stances before a year’s worth of settlement negotiations disintegrated. In the end, Massachusetts netted $318 million from the settlement, including $257 million in mortgage modifications, while keeping half of its December lawsuit alive.
The day after joining the settlement, Coakley began beating the drum on Fannie Mae and Freddie Mac, urging the two government-owned mortgage giants to commit to similar mortgage modification regimes. “They can’t just sit on their hands and say, ‘We can’t do anything because of our investors,’” she says. “I don’t think that’s an adequate answer.” Coakley is also serving on a new state and federal task force charged with investigating the packaging and sale of bubble-era mortgage bonds—an area the banks unsuccessfully sought immunity in during the foreclosure settlement talks.
“She didn’t let up,” says Kathleen Engel, a professor at Suffolk Law School who specializes in mortgage finance. “She has her foot on gas pedal, and it’s going to stay there.”
The Kennedy link
“The work begins anew, the hope rises again, and the dream lives on.”
Martha Coakley closed her Senate campaign by quoting Ted Kennedy. She pumped her fist before a roomful of somber supporters on election night and sounded upbeat. If you didn’t know any better, you’d think she’d just won. Coakley was channeling Ted Kennedy from 2008, an aging lion uttering a triumphant roar at the Democratic National Convention. It’s notable that Coakley wasn’t quoting Ted Kennedy from 1980, when he issued a similarly-worded, but distinct, declaration. That Kennedy had just been routed in his ill-fated primary challenge to President Jimmy Carter, and he was promising his partisans that there would be hope at the other end of the wilderness they were about to enter together.
Coakley and Kennedy will be linked forever. It comes with turning the Kennedy Seat into the People’s Seat, as Brown renamed it. At the same time, it’s possible that Kennedy’s career in the Senate is informing the career of a woman whose moment of political prominence came when she failed to grab the Senate baton he left behind. Kennedy broke the primal rule of politics—move up or move out. After failing in his 1980 bid for president, Kennedy realized the job he wanted was the one he already had. Coakley has rebounded from her Senate defeat and established herself as a national figure. In doing so, she has caught the attention of the chattering classes. They wonder what her next move will be. Many assume she’s setting herself up for a run at governor, or another bid at the Senate, should John Kerry’s seat open up after November’s presidential election. Coakley may be in the midst of a ferocious political comeback. Or she may be having her Ted Kennedy moment, when, freed of the constant political pressure to position herself for her next move up the ladder, she finds peace with the job she already has.
“She doesn’t have the same natural campaign skills as Scott Brown or Deval Patrick do, but that’s OK, because she has immense talent in the business of government,” says Dan Winslow, the state rep who serves as Brown’s campaign counsel. “To do the job right, you have to make enemies, and I thought she’d pull punches. Now, she’s using the office in ways that, if she’d done five years ago, she might be a US senator.”
“The great thing about the office is, the best politics is doing the right thing,” Harshbarger says. “My hope is, with the albatross of people’s expectations off her back, she has been freed to be the kind of AG she wanted to be. She handled defeat with grace. It has freed her up to be a really, really good AG.”Coakley hears the whispers, the questions, and the speculation about her political future. It’s impossible not to. “It’s the equivalent, in the political world, of let’s have lunch, or how’s it going—what are you going to do next?” Coakley says. “It’s just what people say. I think to the extent that politics is a bloodsport here in Massachusetts, there’s a lot of interest in it. It’s a natural question.”
It’s a question Coakley insists she hasn’t asked herself yet. “The thing I try to stress to people is, I couldn’t be happier than doing what I’m doing here. This is a great office. We’re running on all cylinders. We’ve done a lot, and I’m not bored yet. I can see doing this for a while.”