BAILOUT TO STATE BUDGETS: AZ Uses Housing Settlement Money for Prisons

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Editor’s Comment:

The general consensus is that the homeowner borrowers are simply at the bottom of the food chain, not worthy of dignity, respect or any assistance to recover from the harm caused by Wall Street. Now small as it is, the banks have partially settled the matter by an agreement that bars the states from pursuing certain types of claims conditioned on several terms, one of which was the payment of money from the banks that presumably would be used to fund programs for the beleaguered homeowners without whose purchasing power, the economy is simply not going to revive. Not only are many states taking the money and simply putting it into general funds, but Arizona, over the objection of its own Attorney General is taking the money and applying to pay for prison expenses.

Here is the sad punch line for Arizona. The prison system in that state and others is largely “privatized” which is to say that the state “hired” new private companies created for the sole purpose of earning a profit off the imprisonment of the state’s citizens. Rumors abound that the current governor has a financial interest in the largest private prison company.

The prison lobby has been hard at work ever since privatizing prisons became the new way to get rich using taxpayers dollars. Not only are we paying more to house more prisoners because the laws a restructured to make more behavior crimes, but now our part of the housing settlement is also going to the prisons. Another bailout that was never needed or wanted. Meanwhile the budget of  Arizona continues to rise from incarcerating its citizens and the profiteers (not entrepreneurs by any stretch of the imagination) are getting a gift of more money from the state out of the multistate settlement.

Needy States Use Housing Aid Cash to Plug Budgets


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.

In Texas, $125 million went straight to the general fund. Missouri will use its $40 million to soften cuts to higher education. Indiana is spending more than half its allotment to pay energy bills for low-income families, while Virginia will use most of its $67 million to help revenue-starved local governments.

Like California, some other states with outsize problems from the housing bust are spending the money for something other than homeowner relief. Georgia, where home prices are still falling, will use its $99 million to lure companies to the state.

“The governor has decided to use the discretionary money for economic development,” said a spokesman for Nathan Deal, Georgia’s governor, a Republican. “He believes that the best way to prevent foreclosures amongst honest homeowners who have experienced hard times is to create jobs here in our state.”

Andy Schneggenburger, the executive director of the Atlanta Housing Association of Neighborhood-Based Developers, said the decision showed “a real lack of comprehension of the depths of the foreclosure problem.”

The $2.5 billion was intended to be under the control of the state attorneys general, who negotiated the settlement with the five banks — Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally. But there is enough wiggle room in the agreement, as well as in separate terms agreed to by each state, to give legislatures and governors wide latitude. The money can, for example, be counted as a “civil penalty” won by the state, and some leaders have argued that states are entitled to the money because the housing crash decimated tax collections.

Shaun Donovan, the federal housing secretary, has been privately urging state officials to spend the money as intended. “Other uses fail to capitalize on the opportunities presented by the settlement to bring real, concerted relief to homeowners and the communities in which they live,” he said Tuesday.

Some attorneys general have complied quietly with requests to repurpose the money, while others have protested. Lisa Madigan, the Democratic attorney general of Illinois, said she would oppose any effort to divert the funds. Tom Horne, the Republican attorney general of Arizona, said he disagreed with the state’s move to take about half its $97 million, which officials initially said was needed for prisons.

But Mr. Horne said he would not oppose the shift because the governor and the Legislature had authority over budgetary matters. The Arizona Center for Law in the Public Interest has said it will sue to stop Mr. Horne from transferring the money.

7 Responses

  1. Any chance of that happening here? Please, please, pretty please…? Because the way I see it, a president willing to do that won’t hesitate cutting everyone’s else’s salary as well. Barmitt Obamney? Did you read that? Want to put your money where your mouth is? From what I understand, as soon as a president cuts his salary, he grows balls…

    L’austérité c’est moi: Hollande cuts his pay by 30 percent
    New president Francois Hollande will slash his salary and his ministers’ salaries, amid promises not to ratify the European treaty on fiscal discipline unless it is amended to include commitments to promote economic growth.

    Sorry guys. Terribly un-ladylike and unbecoming.


    “…Norman Rousseau now counts among the victims of the foreclosure crisis driven to tragic ends. Just last week, a Connecticut woman facing foreclosure shot her 85-year-old mother before turning the gun on herself, The Hartford Courant reports. The event is sadly reminiscent of a senior Ohio couple who, also facing foreclosure, were found with fatal gunshot wounds…”

    All this tragedy because of “collection rights” to false default debt…a giant LIE…a giant PONZI…the blood of all these people are on the banks and Obama and his cronies…what a waste.

  3. Where will it end if jailing folks is profitable and the rule of law is something of the past that we grew out of, or something Jame Diamond makes up as he goes along like “yes we were stupid” or “yes we were sloppy” meaning its going to change, HA.
    we are talking Stalins rule all over again, and i will be locked up in a few years for saying such things, is that it, fear factor.
    A work collegue said this to me the other day” theres 3 boxes, the soap box, the ballot box, and the amo box.” (thats for you enraged)

    “i am no bird and no net ensnares me
    i am a free human
    with an independant will”
    (jayne Aire)

  4. Neil thank you for bring this to light. How long will it take for the main stream to catch onto the atrocities happening in AZ and around the US? How many homes/lives need to be lost? In your last post you mentioned judges not adhering to the statute and you are correct. Is it too much to ask for the laws to be followed?

  5. Agreed BSE…And the corruption continues to crawl, we need to squash that political/business attitude/thinking dead by speaking out to the idiots that do not see that….

    We the people are indeed watching and banking info, thank you Neil and staff, we do need to know how our wonderful 🙁 well paid hired workers are taking care of business for “We the People”,. It is getting tiresome to see them caught “once again” with their hands in the WRONG pocket…ahhh so many corrupt… so little patients to deal with them. Like a bad evil entity that is so very, very disgustingly vile, money will only go so far for the evil, only so far. Our guts and tenacity will forge a new path to common sense and INTEREST in the GOOD of ALL will outweigh this “ELECTED” scum. They are truly disgusting and vile, but evil is like that once you peel the layers back, no matter how the outside package appears …still vile. Thanks for the info. They need to be lumped into the bunch (idiot bankers) that have already resigned and now is not soon enough.

  6. That’s a great idea! Take everything away from everyone including their job. Reduce people to defaulting on everything in order to eat, throw them out in the street, men, women, children, and invest in state prisons to finish the job.

    Come to think of it, goes hand in hand with collection agencies obtaining default judgments and turning around to file criminal charges and have debtors thrown in jail… because the notice was sent to the house they just lost and they have no current address. If this doesn’t qualify as a job well done, I don’t know what does!

    Cruelty as an art form. No one can deny that we are looking at pure evil. It is absolutely beautiful!

    It is going to blow. Boy oh boy, is it ever! 320 million people. 290 million firearms…

    Tuesday, December 13, 2011Collection agencies resort to throwing American’s in jail for unpaid debt.
    Collection agencies are resorting to some unusually harsh tactics to force people to pay their unpaid debt, some of whom aren’t aware that lawsuits have been filed against them by creditors.

    Here’s how it happens: A company will often sell off its debt to a collection agency, generally called a creditor. That creditor files a lawsuit against the debtor requiring a court appearance. A notice to appear in court is supposed to be given to the debtor. If they fail to show up, a warrant is issued for their arrest.

    Beverly Yang, a legal aid attorney with Land of Lincoln Legal Assistance, says most debtors don’t know their rights.

    In fact, she says, some judges don’t even know debtors’ rights, which could result in the debtor being intimidated into a pay agreement.

    “I’ve seen this even when I’m standing in the court room as the legal aid attorney,” Yang says. “The judge will ask if they can pay, how about $150 a month. How about $75 a month? How come you can’t even pay $50 a month? Did you apply for a job last week?”

    The Federal Trade Commission received more than 140,000 complaints related to debt collection in 2010. That’s nearly 25,000 more than the previous year.

    Yang says some creditors are eager to use harsh tactics. “Whatever the creditors or the creditors’ attorneys can do to leverage some kind of payment, it will help their profits enormously because they have, literally, millions of these.”

    Illinois Attorney General Lisa Madigan thinks more can be done. It’s illegal in Illinois for people to be sent to jail because they’re in debt. But Madigan thinks some creditors are abusing the law.

    “You wouldn’t be in that predicament if you didn’t have debt,” Madigan says. “But for being in debt, you wouldn’t be in prison. And that essentially equates to being thrown in jail, debtors’ prison.”

  7. Time to write the Arizona Attorney General Tom Horne and ask “why” the AZ AG is not prosecuting the banks and servicers for corruption and racketeering by submitting false credit bids from non-creditors at foreclosure auctions. The good ole boy auction system in AZ is a farse. It is time a few go to jail !

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