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The typical news organizations (are they really even “mainstream” anymore?  I mean, who’s paying any attention to what the paid propaganda outlets say anymore?) Anywhoo, they are all ignoring the real stories….Naked Capitalism isn’t:

Late on Friday, a coalition of African-American, Latino and Asian-American groups sued California Governor Jerry Brown, demanding that he return $350 million stolen from the state’s share of the National Mortgage Settlement to plug a budget hole.

California is far from the only state to divert money given as a penalty for homeowner abuse into the General Fund; in fact, less than half of the $2.5 billion given to states in the settlement actually went to housing (and that’s a generous rendering which counts things like North Dakota spending to increase housing stock in oil country for police officers, when that has nothing to do with compensation for abuse). In fact, consumer groups in Arizona already tried to sue to force $50 million that went to their state’s General Fund back into the hands of homeowners. But a Maricopa County judge ruled that the language of the consent order was sufficiently broad to allow the diversion of funds.

Does that mean that this California lawsuit is nothing more than a show of vanity, destined to fail? Absolutely not. In fact, by a strict reading of the case law and the documents in the case, the plaintiffs should win in a walk.

First of all, the plaintiffs have as lead counsel Neil Barofsky, the former Special Inspector General of TARP (mentioned in my previous piece, so I guess it’s Barofsky day here), who has shown his diligence and attention to these types of matters (his firm is doing the case pro bono, with the potential provision of fees by the court if they win the case). More important, not only is the state law, which governs in this instance, more favorable in California to a positive ruling, but the language of the consent decree for California is more airtight.


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