Say What?

Let me get this straight.  The President of the United States makes a big announcement earlier this month, with attorneys general by his side, claiming a $25B deal has been cut with banks to help home owners, wrestling with mortgage payments.  President Obama calls it yet another step toward turning around a struggling housing industry, that’s been a drag on the economy.  Connecticut Attorney General George Jepsen is also all smiles, especially when its revealed $147M is coming the state’s way.  Newscasts everywhere lead with the story.

So what was the Attorney General doing before a legislative panel this week, urging lawmakers to use the money for mortgage relief?  Wasn’t that the intended purpose?  Wasn’t that why there was a big hoopla surrounding the announcement?   Apparently not.  The co-chair of the General Assembly’s Finance, Revenue and Bonding Committee, Rep. Patricia Widlitz D-Branford,  tells the Associated Press the money should be used to assist borrowers but “it could be tempting,” as state government seeks revenues.  “There’s always pressure.  That’s to be expected,” she said.

What’s to be expected?  That once again, government cannot control the urge to spend and so it needs to siphon money, earmarked for other projects, to balance its books?   If Connecticut and other states cannot avoid the temptation to raid the account, then the $25B deal will be nothing more than a government shakedown of banks, instead of a first step toward reforming the banking industry, no matter how small the settlement may seem to home owners with toxic mortgages.

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