We're The Government. We're Here To Ignore You.
Shaila Dewan writes in The New York Times that hundreds of millions of dollars meant to help struggling homeowners is being diverted by states to other purposes:
In a budget proposed this week, California joined more than a dozen states that want to help close gaping shortfalls using money paid by the nation's biggest banks and earmarked for foreclosure prevention, investigations of financial fraud and blunting the ill effects of the housing crisis. California was awarded more than $400 million from the banks, and Gov. Jerry Brown has proposed using the bulk of that sum to pay the state's debts.The money was part of a national settlement valued at $25 billion and negotiated with five big banks over abuses in their mortgage and foreclosure processes.
The settlement, reached in February after a year of talks and intervention by the Obama administration, was the second-largest in history involving the states, trailing the tobacco industry settlement, and represented the first large-scale commitment by banks to provide direct aid to borrowers.
As part of the settlement, the banks agreed to pay the states $2.5 billion, money intended to help homeowners and mitigate the effects of the foreclosure surge. But critics complained that this was the only cash the banks were required to pay -- the rest comes in the form of "credits" for reducing mortgage debt and other activities. Even that relatively small amount has proved too great a temptation for lawmakers.
Only 27 states have devoted all their funds from the banks to housing programs, according to a report by Enterprise Community Partners, a national affordable housing group. So far about 15 states have said they will use all or most of the money for other purposes.
Again, if this shocks you, you're either 12 or you shouldn't be voting.
In theory, New York cannot run a budget deficit. I assume the same is true of California. That money the state stole that was going to help subsidize the mortgage you can't afford is going to be replaced by money from you. Income tax, sales tax, property taxes, user fees, gas taxes, increased tolls, name your poison. You didn't expect them to spend less, did you?
MarkD at May 17, 2012 5:44 AM
This is the same thing that was done with the tobacco settlement money. The funds were supposed to the state Medicaid programs. In some cases it would have been 2-3 years worth of funding. That didn't happen.
And then fed upped the tobacco taxes, an average of 156% to fund the State Children's Health Insurance Program (SCHIP) expansion.
This after Obama's promise:
Jim P. at May 17, 2012 5:47 AM
Any time the government tells you that the money from ___ program is ONLY going to fund ____, they're lying. The author of a bill creating a tax ("fee") for an aid/research/whatever program might intend it that way, but the people who write the budget in the next session are going to do whatever they want with it. It happens in TX all the time- and I'd wager it happens in all states that require a "balanced" budget. They might not be operating at a deficit, but the goodies and aid and roads and youth programs that were supposed to be funded by the "negligible tax on product/service C" is just going to end up in the general fund. To believe otherwise is incredibly naive or shows a lack of historical knowledge.
ahw at May 17, 2012 7:28 AM
I'm kinda of shocked that 27 states intend to use the money as intended.
I R A Darth Aggie at May 17, 2012 9:02 AM
> I'm kinda of shocked that 27 states intend to
> use the money as intended.
That's my kind of sarcasm!
(I'm not saying you didn't mean it, just that... Y'know.)
Crid [CridComment at gmail] at May 17, 2012 5:52 PM
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