Five big banks have agreed to give twenty-three Democratic attorneys general more than a billion dollars that can be distributed to housing groups and community organizers in the months prior to the 2012 election.
The money is part a deal valued at $25 billion that the five banks announced Feb. 9 with President Barack Obama’s deputies and with a coalition of 50 attorneys general. Ninety percent of the value consists of mortgage write-offs, accounting changes and cash transfers that are to be delivered to homeowners over the next three years.
But $1.1 billion in cash will be transferred to the Democratic attorneys general as soon as the deal is approved by a judge, which is expected to happen in March or April.
The bank deal is also slated to deliver almost $1.4 billion to Republican attorneys general, but many of the GOP attorneys general have already announced they will transfer the funds to state legislatures.
The deal is a government shakedown of bank executives and their shareholders, said Tom Fitton, the president of Judicial Watch, a law firm that promotes transparency in funding.
By using the courts, the Democrats and their patronage groups have seized money and the ability to favor constituencies that elected legislators in Congress had already denied them, Fitton told The Daily Caller.
“The left is very adept at using the offices of the federal government to keep itself funded, and Republicans are generally oblivious to this,” he said. “Tax dollars shouldn’t be going to interest groups on the left — or the right,” he said.
Few Republicans, he said, “understand that they need to defund the left.”
Some GOP leaders are becoming alarmed about the political payoffs in the growing number of bank lawsuits.
On Jan. 25 Texas Republican Rep. Lamar Smith, chairman of the House Judiciary Committee, asked Attorney General Eric Holder to explain a December $335 million deal with Bank of America that would direct some of the funds to progressive groups.
Democratic-affiliated groups are already lobbying to win shares of the Feb. 9 funds, including a share of the $430.2 million being sent to California Attorney General Kamala Harris.
“In the last conversations we had with [Harris' office] … they were still trying to decide how that money will be best used,” said Rosa Cabrera Aqeel, a community organizer in California for People Improving Communities through Organizing. “It is our understanding that we will be working cooperatively about how those funds are spent,” she added.
“There are local community organizations that are struggling to keep the doors open and they are really on the front lines of this,” said Jordan Estevao, a D.C. advocate for the National People’s Campaign and a coalition of progressive groups, dubbed the New Bottom Line campaign. “In many cases, it would be appropriate for them to get help in organizing homeowners and making sure that banks are held accountable,” he said.
Instead of $25 billion, the banks should be held responsible for the $336 billion that homeowners are underwater, said Estevao.
Once the attorneys general cash their checks, the flow of funds “will be difficult to track,” Fitton said.
Some of the money may be sent to advocacy groups that are allied with the Democratic Party, said Dan Epstein, at Cause of Action, which tracks corruption in federal funding.
“There is concern about Action Now, Alliance of Californians for Community Empowerment … and New York Communities for Change,” which were affiliates of the controversial street-politics group, the Association of Community Organizations for Reform Now, or ACORN, he said in a statement to TheDC.