States Grab Robosigning Settlement—to Pay Own Bills
California, Georgia, others use settlement as slush fund
By Kevin Spak,  Newser Staff
Suggested by Mr_Joshua
Posted May 16, 2012 11:14 AM CDT
California Gov. Jerry Brown unveils his state budget on May 14, 2012 in Los Angeles. California is one of several states using its mortgage settlement to plug budget holes.   (Getty Images)

(Newser) – When banks agreed to hand the states billions of dollars to resolve the robosigning scandal earlier this year, the money was supposed to go to help struggling homeowners. Instead, more than a dozen states have used it to plug holes in their budgets, the New York Times reports. The latest is California, which in a budget proposed this week simply uses the money to pay down its debts.

States only squeezed $2.5 billion in cash from the banks, but even that money has been enough to tempt lawmakers. Only 27 states have used it purely for housing-related projects. Some attorneys general are fighting this, while others are going along with it. "These funds should be used to help Californians stay in their homes," California AG Kamala Harris said. But when asked if she could legally appropriate the funds, Harris, who like the governor is a Democrat, wouldn't comment.