Is Jay Nixon wrongly diverting the mortgage settlement money?
The Kansas City Star
Some left-leaning bloggers who have been bashing GOP Gov. Scott Walker of Wisconsin for opting to use funds from last week’s mortgage settlement to cover the expenses of state government are now surprised to learn that Missouri’s Democratic governor is planning to do the same thing.
Here’s the deal: 49 states are participating in a $26 billion mortgage settlement with the nation’s five largest banks. The settlement establishes a formula which compensates homeowners who have lost their homes or are struggling to stay in them thanks in part to unscrupulous practices by the banks. The formula then carves out a chunk of cash for states to use at their discretion.
Missouri’s amount is about $41 million, which Gov. Jay Nixon says he will use to give some relief to colleges and universities, which are reeling from a proposed 12.5 percent cut in Nixon’s budget plan for next year. In Wisconsin, Walker plans to use about $25.6 million of his $31.6 million in discretionary funds to meet budget needs.
I see two sides to this. An official website about the settlement says the money allocated to states is “to help fund consumer protection and state foreclosure protection efforts.” On the other hand, you can’t really blame cash-strapped governors for wanting to be a bit inventive about that. Could the universities or community colleges offer non-credit classes on mortgage protections, for instance?
On the whole, I guess I don’t view this as a scandal or breach of faith. We’re all learned a lot from the mortgage scandal, and hopefully consumers and lenders will be a lot smarter going forward, even without a $40 million education effort. It will be interesting to see if the Republican-controlled legislature, which must actually pass a budget, views things differently.