Protests Intensify as Mortgage Settlement Nears

(Reuters) -- As state and federal officials near a deal with top banks to settle claims of foreclosure abuses, left-leaning activist groups have stepped up pressure on the officials to reach a deal that demands more from the banks.

Around three dozen protesters from groups that include MoveOn.org, National People's Action and The New Bottom Line gathered outside the Illinois state office building in downtown Chicago on Monday morning in a blustery rain chanting "banks got bailed out, we got sold out."

The activists, some of whom held signs that said "make Wall Street pay" and "President Obama investigate banks now," also marched a few blocks east and chanted in front of President Barack Obama's re-election campaign headquarters.

Democratic state attorneys general and Obama administration officials are meeting on Monday in Chicago to discuss the terms of the settlement, and Republican state officials are expected to be briefed on a conference call later in the day.

Several protest leaders said they planned to confront negotiators meeting at a Hilton hotel near O'Hare International Airport.

A spokesman for Iowa Attorney General Tom Miller, who is leading the negotiations on behalf of the states, declined comment beyond saying no news conference or announcement was planned for this week.

According to past reports of the settlement talks, the banks -- Bank of America , Wells Fargo & Co , JPMorgan Chase & Co , Citigroup and Ally Financial Inc -- would provide $20 billion to $25 billion of relief to homeowners in exchange for being allowed to put behind them potential government lawsuits about improper foreclosures and abuses in originating and servicing mortgage loans.

As talks have dragged into their second year, some states and activist groups said the proposed deal released the banks from too many claims and did not provide enough relief to homeowners.

The total value of the deal depends on which states decide to join, and could drop sharply if certain states, including California, decide not to sign on. The attorney general there pulled out of the talks last year, saying she was not comfortable with the deal under discussion.

The activist groups have increased their pressure in the past week, as negotiators put the final touches on a deal.

Last week U.S. Housing and Urban Development Secretary Shaun Donovan said a deal was "very close" and suggested the settlement could help about 1 million homeowners reduce their mortgage debt.

On Monday, two Democratic lawmakers joined representatives of MoveOn.org, the Campaign for America's Future, and other groups on a conference call with reporters to call for a deeper investigation into mortgage abuses.

"Instead of criminal prosecutions, we are talking about not much more than a slap on the wrist," Senator Sherrod Brown of Ohio said. "In many ways, Wall Street isn't just too big to fail, it's also too big to jail."

In another sign negotiators were close to a deal, three regional banks signaled they had begun talks to also enter the settlement.

Two of the regional banks, PNC and US Bancorp , reported a total of $370 million in mortgage-related expenses, and a third, SunTrust , said the discussions were at a preliminary stage and it could not yet estimate any financial impact.

(Reporting By Andrew Stern in Chicago and Aruna Viswanatha in Washington, D.C.; Editing by Steve Orlofsky)