Top lenders are pouring hundreds of millions of dollars into states from mortgage-fraud settlements as payback for their faulty practices during the financial crisis.
But that money is leveraging a lot more power than just correcting housing problems.
Attorneys General are capitalizing on the money — pun intended — to help gain political power, an article in Businessweek reported.
Most notably, the recent $613 million settlement with JPMorgan Chase (JPM) tripled New York state Attorney General Eric Schneiderman’s annual budget.
Schneiderman said he’d use the cash to reimburse victims and finance investigations. Governor Andrew Cuomo, a fellow Democrat, questioned Schneiderman’s hold on the money and a dispute over the cash ensued.
“Politics is all about money and power,” said Peter Henning, a former lawyer with the Securities and Exchange Commission and a professor at Wayne State University Law School who has written about the JPMorgan settlement. “AG stands for almost governor.”
But the fight between AGs and governors is nothing new.
Such rivalries have been going on for decades, said Tierney, a key adviser in the $246 billion settlement among the tobacco industry, the U.S. government and 46 attorneys general in 1998.
In the 15 years since, governors used the money for bridges, tax relief and other purposes not related to tobacco control or health that the attorneys general had proposed.