9/25/14 Slush Fund

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Nearly $37 billion has been collected from major banks by the Justice Department.  This includes $7 billion from Citibank.  $13 billion from JP Morgan Chase.  And nearly $17 billion from Bank of America.

Supposedly, all the money is to go to victims of the housing collapse that precipitated the 2008 crash of the economy. 

Supposedly.

In the 1990s, the federal government coerced banks to give mortgages to people who didn’t have the means – and in some cases, the desire – to pay back the money.  Then the banks packaged billions of risky loans in complicated investment instruments and . . . well, the rest is history.

The $16.7 billion Bank of America settlement requires the bank to return to some of the risky practices that crashed the economy.  Billions in mortgages must be given to borrowers who pose high risk.

Included in the agreement is this 10-page addendum.  Buried in the fine print – literally, it’s really small print – is a footnote that requires money to go to something called an Interest on Lawyers’ Trust Account.

Some IOLTAs will likely funnel this money to groups not officially connected to the Bank of America settlement.  Some of the 50 state IOLTAs have become slush funds for activist groups.

An example is the Mutual Housing Association of New York, which is  alleged to be an off-shoot of the disgraced ACORN organization.  Which Congress banned in 2009 from receiving federal money.

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