As a news junkie and student of the human condition, it takes a lot to make my blood come to a full boil. It takes even more to make me sympathize with wealthy corporations. Hand it to Gov. Jerry Brown — he managed to pull off both feats with the news that he diverted $350 million from California’s share of the 2012 national mortgage settlement in order to reduce the state’s 2013 budget deficit.
Now that California is enjoying a budget surplus, a coalition of homeowner advocates and religious organizations has filed suit against the state to force Brown to restore the money.
Back in 2008-09, the real estate bubble burst, taking the global economy with it. By many measures, especially real unemployment and median wages, we still haven’t recovered.
By 2010 a political consensus had formed. Though politicians were partly to blame, the worst offenders were the giant “too big to fail” banks that had knowingly approved loans to homebuyers who couldn’t afford to pay them back, sold bundles of junk mortgage derivatives to unsuspecting investors and secretly hedged their bets against their clients. After the house of cards came down, they played the other side. They cashed in their chips, refused to refinance mortgages even though interest rates had fallen and deployed “robo-signers” to illegally evict hundreds of thousands of homeowners — including people who had never missed a payment — to ding them with outrageous late fees on their way to profitable (for the banks) foreclosure.
On the Left, anger at the banks coalesced around the Occupy Wall Street movement. Though less widely reported, anti-bank sentiment also found a home in the Tea Party.
Politics ultimately play out in the courts. Lawsuits filed by state attorney generals forced the banks to the bargaining table. In 2012 they agreed to cough up $26 billion as penance.
The money was supposed to compensate people who had lost their homes and to help those who were hanging on by a thread avoid eviction, either by refinancing at lower rates or writing down principal to reflect lower real estate prices.
Enter the governors.
Jerry Brown wasn’t unique. Cash-hungry states siphoned off half of their share of the mortgage settlement to plug holes in their budgets.
We will never know how many families became homeless as a result.
The more you think about it, the more disgusting it is. Obviously it’s important for the state to get its fiscal house in order. But not at the expense of those least able to bear the burden. Desperate families lost — and are still losing — their homes so that holders of California’s state debt, much of it held by the same banks who caused the mortgage crisis, can be repaid.
This outrage is not without precedent.
Rather than the anti-smoking and health campaigns they were supposed to launch, the states siphoned off 47% of the $7.9 billion they received from the 1998 tobacco settlement for general budget purposes.
How many kids might have been reached by tobacco education programs that never got off the ground? How many will die of lung cancer? “Fifteen years after the tobacco settlement, our latest report finds that states are continuing to spend only a miniscule portion of their tobacco revenues to fight tobacco use,” the Campaign for Tobacco-Free Kids said in 2014. In Fiscal Year 2014, the states will collect $25 billion in revenue from the tobacco settlement and tobacco taxes, but will spend only 1.9 percent of it – $481.2 million – on programs to prevent kids from smoking and help smokers quit. This means the states are spending less than two cents of every dollar in tobacco revenue to fight tobacco use.”
This is the kind of behavior that prompts conservatives to characterize these settlements as government shakedowns of big business. It’s hard to disagree. As slimy as the banksters were and are — they’re sabotaging political solutions to the foreclosure crisis — they’re just greedy bastards doing what greedy bastards do. Public officials, on the other hand, are supposed to be on our side.
What Brown and his fellow governors have done with the mortgage settlement money is even more nauseating.
8 Comments.
Too big to fail, too well armed and psychopathically murderous to jail.
Ted is, as usual, correct on the issue.
The recovered monies should absolutely have been used to soften the blow for those most susceptible. We’re all in this together It’s better for society if people have jobs and own their own homes, as opposed to say – living in a box and panhandling for a living. So, if a little public money makes that possible, then the public as a whole benefits.
Ted’s also right on the funny recovery, if the GDP is up – why is the average standard of living still dropping? We’ve got Boeing raking in record profits while using their immense power to get even more tax breaks while on the other hand, they’re using that same power to neuter the union. WTF? If a rising tide raises all boats, then if it isn’t raising all boats it must not be a rising tide.
“This is the kind of behavior that prompts conservatives to characterize these settlements as government shakedowns of big business.”
… and the downside is, what, exactly?
“We” bailed ’em out – arguably the right thing to do, but then “We” shoulda been given ownership. I could grudgingly live with gov’t ownership (“socialism”) simply because I don’t think full-on public ownership (“communism”) would work. No way in hell should the banksters have been left holding the reins of the very system they screwed up.
Wanna’ know whose chestnuts Moonbeam will pull out of the fire first (, last, and most faithfully)? Just check and see which corporations best-financed (both directly, and by proxie) his last (and prevalently everlasting) political campaign.
DanD
“We’re all in this together”
Christ, people like you are a menace. I knew you were deranged but I didn’t know how badly. People like you that think this is one big hippie commune should be marginalized as much as possible.
I don’t recall saying that this is one big hippie commune, can you supply a quote to that affect?
In case you hadn’t noticed, we all occupy the same country on the same planet. When the banksters made their play, they didn’t just affect themselves, it had an affect on all of us.
When the economy crashed, it came down in waves. First some people lost their incomes, that meant that their neighborhood stores didn’t get as much business. So they closed up shop and joined the ranks of the unemployed. The places they frequented then had less business
… oh, come on this is ECON 101 ….
but it happens to be exactly what I’m talking about. Maybe I own a store, if my customers have more money, then they buy more stuff. I make more money so I hire more people. The Economy prospers and soon *everybody* has more money. It’s a basic premise of the theory of capitalism.
But there’s a little ANTHRO 101 in here as well. Humans are pack animals. We evolved (” were designed” / “created”) to work together. A single, naked, human working alone is simply fresh saber tooth kitty chow. TOGETHER we conquered this planet, and together we can pull ourselves out of this mess.
So, yeah, if you trip I’ll help you back up; when I’m down, I expect the same from you. Is that compassion or enlightened self interest? Does it matter in the end?
But, exkiodexian, successful people are responsible for all the unsuccessful people! That’s the part of personal responsibility that you conservatives just don’t get: taking care of everyone else. It’s NEVER anyone’s fault if he fails, it was just unfair chance. He must need successful people/government assistance! Nay, he deserves it! That’s how humanity has become great and strong: by waiting to be helped by others! It is ALWAYS good when the government takes from people. We must need even bigger government!
exkiodexian;
Back in the middle and late 1700s, a bunch of middle and upper-middle class, colonially Caucasian property owners adopted a similar meme of “We’re all in this together” … except they branded their (at least as) socialist cause as “We the People.”
You see, they were “commonly” involved in a royally directed, cultural conflict with a politically much more “conservative” group that fundamentally claimed that “God” (just a variation on “Might-is-Right”) gave them the preemptive authority to summarily seize all the property of anybody who threatened their deifically-ordained way of life.
You’d rather go back to them “Good-ole-Days?”
DanD
One wonders why we even bothered to have a revolution. We already had a system where church and state were inextricably intertwined, where the rich lived a life of luxury on the backs of the poor, and where a Unitary Executive could pronounce sentence without all that bothersome due process.
The Repooblican Dream!