Is it Right to Divert Settlement Money Intended for Citizens?

diverting moneyNew Orleans   Every once in a while we stumble on some real “ah-ha” moments, where the obvious finally is so unavoidable we almost trip over it.

            For me this has been happening recently while reading about the JP Morgan Chase $13 billion dollar settlements as the money is distributed to the states and the states put the money towards foreclosure remediation.  The money starts as too little too late for millions of foreclosure families victimized by the banks’ fast, loose, and, frankly, fraudulent practices.  The state Attorney Generals got in the game and righteously sued Chase and the rest of the banks along with federal government in order to provide relief for homeowners.

            Then after the story moves off the front pages, and then later off of the business pages as well, to the nitty-gritty where it can finally do some good, what happens?  I had never fully grasped how little, if any, might actually get to the victims themselves.  The story of the dispute between New York State Attorney General Eric Schneiderman and Governor Andrew Cuomo brings all of this to the forefront.  New York gets more than $600 million of the settlement with about $165 million in the first year.  It seems the Attorney General wanted to use the money to actually go to housing programs and foreclosure remediation.  It seems that the Governor wanted the whole sum initially to go into the general fund of the State of New York, ostensibly to pay for pre-K education.  Hey, universal pre-K is a great thing, but why would Chase foreclosure money not actually be used to fund foreclosure abatement and remediation for the thousands of victims in New York State?  That’s why New York’s share was $613 million after all.    So, they made a deal for the 1st year only that gave half or $80 something million for housing programs and the other half to the general fund. 

This doesn’t seem quite right does it?  Yet, it may be the normal “bait-and-switch” being performed in state after state.

Take the giant tobacco settlement money that those companies are still paying to the states as another big fat example.  As the years have gone by, it is shocking to see how underfunded tobacco prevention programs are by the state.  It’s hard to compare one to one with the foreclosure money because too many of the reports mix apples and oranges between a state’s share of the settlement billions and their even greater share of tobacco taxes they collect, but regardless the Center for Disease Control reports that prevention programs are only being funded at about 19% of what is needed. 

Said more pointedly, 15 years after the huge tobacco victory in 1998, of the more than $25 billion the states receive in settlement money and tax revenue annually, less than a half-a-billion is spent protecting citizens from the smoking companies.  The CDC honor roll of states even spending half of what is needed is short:  Delaware, North Dakota, Wyoming, Oklahoma, and Alaska.  On the other hand those spending less than 10% of what’s needed number 23 states throughout every region of the country. 

Exactly how are state governors and legislatures able in good faith to resolve the fact that they are collecting money as stewards of their citizens for their housing and health and then diverting the money to whatever and wherever, rather than actually using it to address the abuse or save lives?

And, why in the world are we letting them get away with this? 

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