President Barack Obama is facing mounting resistance from state attorneys general who say a deal would exonerate banks for their role in fraudulent foreclosure practices.

Obama has been pressuring the attorneys general to sign off on a deal in which banks involved in unscrupulous lending and foreclosure processing would free themselves from any more liability with a one-time payment to states. The White House has argued that the deal would help to stabilize the housing market and spur more lending from banks, but some attorneys general are reluctant to so quickly let banks off the hook.

New York Attorney General Eric Schneiderman and Delaware Attorney General Beau Biden are opposed to the deal on the table, and while those two have more clout because of the large concentration of banks in their respective states, their qualms are gaining resonance with attorneys general.

If you as a state haven't investigated because you've relied on someone else to do your investigation, then I think states fear they could be accused of not doing their due diligence, Kentucky Attorney General Jack Conway told POLITICO. It goes against the DNA of an AG to say, 'I'm going to agree to a waiver of liability without investigation.'

One Big Transgression: Bank Robo-Signing

The settlement focuses on foreclosure related practices like robo-signing, in which banks employees signed sworn statements without reading or understanding them or used fake signatures, that abounded as banks tried to plow through a tide of foreclosures. But Schneiderman has launched a separate investigation of the banks' practice of repackaging low-quality mortgages into AAA-rated bonds, and has pushed back on any deal that would shield banks from such an inquiry.

Iowa Atorney General Tom Miller, who leads the committee, ousted Schneiderman from the committee in August for having actively worked to undermine the negotiations and has insisted that a settlement wouldn't release the banks from civil liability. But more attorneys general have since rallied to Schneiderman's cause, and California Attorney General Kamala Harris has emerged as a key player.

The banks want to get away with everything, and she [Harris] is probably one of the linchpins in saying that is going to happen or isn't going to happen, said Liz Ryan Murray, the chairwoman of the foreclosure task force at Americans for Financial Reform, told The Los Angeles Times. We would like to see her come forward and be more public on what she will and won't give up.

The deal backed by Obama is also unpopular among some liberals who see the president as once again failing to hold Wall Street accountable.

The least charitable view ties it directly to campaign donations, Adam Green, co-founder of the Progressive Change Campaign Committee, told POLITICO. He added that there are a lot of progressives, and frankly everyday voters, who wish this White House would cut their ties with Wall Street, stop the sucking up to Wall Street.