Wednesday, May 16, 2012

Hidden Bail Out; States Divert Cash Meant For Mortgage Relief To Fill Budget Holes

You might remember that a five of the country's largest banks were essentially arm twisted into a settlement of $25 billion dollars in cash and mortgage credits by the feds to be used to provide foreclosure prevention, investigations of financial fraud and a partial cure for the effects of the housing crisis.

I thought then that for the most part, it was simply a transfer of wealth with the Obama Administration and its regulatory czars providing the muscle. Now it turns out I had it exactly right.

The cash part of the settlement, $2.5 billion, is being used by most of the states that received it not to aid homeowners, but to fill the gaps in their state budgets. In California, for instance, the $400 million the Golden State received will be going directly towards filling the shortfall in the State's budget and Governor Jerry Brown has already crunched the numbers to include that money as part of his figuring.

What that essentially means is that rather than the homeowners the money was intended for, the public employee unions are getting it, since they're by far the biggest part of California's budget shortfall. Most of the Blue states are using their share of the swag in similar fashion, so the unions need not participate in any belt tightening.

Needless to say, the Obama Administration and the Justoce Department aren't doing anything about this since they were in on the game from the start. This was just another bail out, and it will be paid for with higher fees and interest rates by these bank's customers.

This should provide a giggle to those of us in the know the next time some OWS moron starts hyperventilating about 'banksters' and 'the 1%'.

The worst exploiters of working people and the middle class aren't located on Wall Street They're in places like Sacramento and Washington DC.


amspirnational said...

if you read Glittering Eye today, you'll note there isn't much difference between D.C. and Wall Street.

Rob said...

Ah, but there is, as my friend Dave Schuler would almost certainly agree. In DC,they're feeding out of the public trough and generate no inherent wealth. Government never does.

Not only that, but when Wall Street errs, the marketplace punishes them and the effect is immediate. Not so in DC, where the Governing Class can continue for years no matter how bad their depredations.

Ask Barney Frank, Chris Dodd or Franklin Raines about that.