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Cash-Starved States Look To Foreclosure Settlements For Relief

Cash-Starved States Look To Foreclosure Settlements For Relief

Missouri is set to become the second state to divert millions of dollars in funds from the mortgage fraud settlement between state attorneys general and the nation’s largest banks to help balance the state budget. Last week Wisconsin Gov. Scott Walker (R) announced the same thing.

But unlike Wisconsin, Missouri elected a Democrat Governor and Attorney General. Missouri Gov. Jay Nixon and Attorney General Chris Koster want the money that is supposed to go to consumer protection relief to go to higher education spending.

The details of the settlement are still being hammered out, but in principle the money recovered in settlement is supposed to be used by states to “help fund consumer protection and state foreclosure protection efforts”. The fact that both a Republican administration and a Democratic administration are pouncing on this infusion of cash tells us quite a bit about both the settlement and the state of our states.

Our states are in critical need of cash. The instability of low corporate tax burdens, wage stagnation and slashing support for public services has almost overwhelmed completely state government. In fact, states are so desperate for cash that even Democratic administrations that pushed the mortgage fraud investigations and claims are grabbing at it the first chance they get. If this doesn’t add to the compelling argument for tax reform I don’t know what else would.

It’s not clear yet that Missouri and Wisconsin actually have the ability to do what their governors propose. But if they do what does that say about the settlement? We already know it’s woefully inadequate in terms of ameliorating the financial impact of the financial fraud perpetrated by the big banks. If there’s no provision that guarantees the settlement funds go to the victims as restitution and towards consumer protection efforts then the entire exercise was meaningless.

Related Stories:

$26 Billion Foreclosure Settlement: Good News?

Detroit Activists Want A Two Year Moratorium On Foreclosures

NY AG Brings New Charges Against Big Banks

 

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Photo from tracy o via flickr.

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26 comments

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4:07AM PST on Feb 18, 2012

Wisconsin has the option of plugging its deficit by rescinding its ill-advised tax cuts for the rich instead of trying to screw those who are already suffering.

6:34AM PST on Feb 16, 2012

The big difference between MO and WI is that the budget hole in the WI budget is solely the responsibility of Walker and the Reoug/Tea Bagged controlled legislature giving litterally Billions of dollars away to Corproations tha back them.

5:37PM PST on Feb 15, 2012

More Corporate scams and official fraud !!! America has become the masters of deception, the art of lying and fooling the public has risen to new heights. No wonder we are the laughing stock of the world, even though Europe is in dire straits, at least they have more honest government. Not only the GOP lie thru their teeth, the democrats are learning fast and getting good at deception as well. Maybe the 99% will arise and transform the OWS to a movement that will force our elected officials to really represent the little guy.

5:36PM PST on Feb 15, 2012

More Corporate scams and official fraud !!! America has become the masters of deception, the art of lying and fooling the public has risen to new heights. No wonder we are the laughing stock of the world, even though Europe is in dire straits, at least they have more honest government. Not only the GOP lie thru their teeth, the democrats are learning fast and getting good at deception as well. Maybe the 99% will arise and transform the OWS to a movement that will force our elected officials to really represent the little guy.

12:39PM PST on Feb 15, 2012

Wisconsin is already facing this prospect.

It sure would be nice if our governor hadn't given away our entire budget surplus in unfunded tax cuts for the wealthy about a year ago... We might be able to dedicate those settlement funds to the people who actually lost their homes, instead of using them to make up for the rich not paying taxes.

11:23AM PST on Feb 15, 2012

Surprise, surprise, surprise, NOT. Take a look around and tell me if you can see where any money is being spent on the needs of Americans. Our infrastructure is falling down around our ears, our school money is going to administrations, not to the teachers or students and our health care sucks to NO end. We do however have the greatest and most expensive killing machine in the world and our 1% are making out like bandits.

John D. Rockefeller said: “I don’t want a nation of thinkers; I want a nation of workers.” I guess they don’t care if the workers are living in tents and on the streets, starving and doing without health care. What the hell, they want us to breed like rabbits to fill those work houses and prisons and they are winning.

11:22AM PST on Feb 15, 2012

Sounds like another tobbacco settlement does'nt it? This is completely shameful. That money should go to the people whose lives were ruined by the corrupt practices of the banks and mortage companies. The states have already benefitted during tthe good times and should not get one dime of that money!!!

10:33AM PST on Feb 15, 2012

Using this money for anything other than what it was intended for is misappropriation and illegal.

10:22AM PST on Feb 15, 2012

That's what happens when the Feds give money to the states for one thing and they use it for there own personal gain.

10:22AM PST on Feb 15, 2012

Riiiiing Riiiiiiiing
"Hello, Attorney General Holder's office. How may I help you?"
"Uh, yeah, My state has seized my settlement monies and is planning on applying them to other issues than what they were meant for. I believe I have the AG on retainer to the American People. Can you help me?"
"Well, I'm not sure, we'll need an additional $150,000 retainer to free up an attorney on staff to even look at it."
"Well, I kinda think my state government stealing my settlement is fairly important. Aren't there laws against theft?"
"Yes, but they are only applicable in certain circumstances."
"How can any of this possibly be legal?"
"May I put you on hold?Thankyou"

(holding)
(holding)
(holding 3 days now)
(hanging up and giving up)

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