The upshot was, that after stealing billions and creating untold misery for millions, banks once again got away with murder*, or at least with fraud, conspiracy, perjury and grand larceny. It can't get any worse than that, right?
Wrong. The New York Times has published an article revealing that the hundreds of millions of dollars earmarked for housing relief for the states is being used for other purposes. The states are in budget crises from coast to coast, thanks to the de facto austerity policy that is in place here in the Corporate Homeland. Thanks are also due to the same big banks, whose recklessness crashed the economy in 2008, leading to an unemployment crisis and business closings and the resulting shriveling of local tax bases. Regular federal aid to states has dried up too, thanks to the machinations of the phony deficit hawks posing as responsible people in Washington. Dozens of states are, in effect, robbing Peter (the settlement funds) to pay Paul (everything else.) In the best case scenarios, they're robbing from the poor to give to the poor. In the worst case scenarios, they're robbing from the poor to give to the corporations and the rich. Perhaps the worst case of all is in Arizona, where the AG wants to use half the settlement money for (private) prisons. Well, they argue, prisons are considered housing too! You have to put a roof over the heads of all the marijuana smokers and undocumented folks! Luckily, a civil rights group has already sued to try to prevent this particular outrage. But how about Georgia, which will use its $99 million share to "lure job-creators" to move into their state?
Even in my home state of New York, whose attorney general was one of the big holdouts against the Obama Administration's mortgage fraud settlement until he was co-opted into running a non-existent mortgage fraud task force, admits New York's $15 million share will be used to fund legal clinics to counsel homeowners facing foreclosure rather than repay the people who were wrongly foreclosed on. The funding for the legal program was drying up, and the decision was made to use the money proactively rather than retroactively. So the people already out on the street or living in a relative's basement can probably kiss their thousand bucks goodbye.
Texas, of course, never had any notion of using its share for the purpose intended. This is a state, remember, that was threatening to secede a few years ago. What else do you expect when you hand crooked Governor Goodhair (Rick Perry) a fat check from Washington? He'll either pretend to refuse it or find a sneaky way to funnel it to his rich friends. In the case of the fraudclosure settlement, it just went straight to the General Fund with no accountability even offered.
In cash-strapped California, where A.G. Kamala Harris was another diehard holdout on the puny bank settlement, Gov. Jerry Brown has announced his state's $400 million share will go directly toward closing the budget gap:
(Harris was) holding out until the very end for a deal guaranteeing that a large share of the benefits would go to California, and then trumpeting her success in a news conference and a flurry of interviews with national news outlets. So Mr. Brown’s revised budget put her in an awkward position.
“While the state is undeniably facing a difficult budget gap,” she said in a statement, “these funds should be used to help Californians stay in their homes.” Both officials are Democrats.
When asked if Mr. Brown could legally appropriate the money, which is supposed to be held in a special fund “for the benefit of California homeowners affected by the mortgage/foreclosure crisis,” a spokesman for Ms. Harris declined to comment.
Just last week, Ms. Harris announced plans to give about half the money to groups that provide housing counseling and legal assistance to homeowners — groups whose budgets have shrunk while demand for their services grows. The other half would be used primarily for investigation of mortgage-related crime.The Obama Administration apparently never saw this diversionary development coming. They are quietly, even desperately, begging the states to use their sudden mini-windfalls for the intended purpose. Fat chance. It's like giving a starving man $100 and telling him to use it to pay his electric bill.
The $2.5 billion was intended to be under the control of the state attorneys general, who negotiated the settlement with the five banks — Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally. But there is enough wiggle room in the agreement, as well as in separate terms agreed to by each state, to give legislatures and governors wide latitude. The money can, for example, be counted as a “civil penalty” won by the state, and some leaders have argued that states are entitled to the money because the housing crash decimated tax collections.
Shaun Donovan, the federal housing secretary, has been privately urging state officials to spend the money as intended. “Other uses fail to capitalize on the opportunities presented by the settlement to bring real, concerted relief to homeowners and the communities in which they live,” he said Tuesday.Yeah, Shaun. That ridiculous settlement sure would have changed the lives of all those victimized homeowners and their entire communities overnight. But here's the thing: what goes around, comes around. You force through a joke of a settlement, and guess what? The joke turns out to be on you.
Meanwhile, the Administration is trying to save face by launching an FBI investigation into that mysterious $2 billion ($4 billion? $14 billion?) Whale Fail loss over at mortgage fraudster JPMorgan Chase (one of the Big Five banks slapped on the wrist in the settlement.) The number of people believing there is going to be an actual probe is approximately zero.
* There is a case to be made that banks are literally killing people. Job loss and health insurance loss and home loss caused by the bankster-induced economic crash cut years off lives. Bank-assisted suicide is another cause of premature death.