Masto’s settlement plans might require oversight

The Legislature's Interim Finance Committee last month approved a plan presented by state Attorney General Catherine Cortez Masto to spend $33 million over the next three years on outreach, counseling and legal assistance to homeowners who face foreclosure.

It's the first phase of a plan to use $57 million Nevada received from the country's five largest banks as part of a national settlement over mortgage robo-signing and other alleged misconduct. Nevada has received an additional $30 million in a separate settlement with Bank of America.

Although all the committee members eventually voted to approve the spending, Republican lawmakers asked whether it would be better to put the funds directly into the hands of the homeowners on whose behalf the action was brought.

Ms. Masto's first-year budget includes $9.4 million for HUD-certified counselors and nearly $1.2 million for Nevada Legal Services and the Legal Aid Center of Southern Nevada. (Former Assembly Speaker Barbara Buckley, D-Las Vegas, is executive director of the Legal Aid Center of Southern Nevada.) Nearly $570,000 would be spent to expand an existing state call center. The attorney general would get to keep just under $500,000 to fund further investigations and administer the whole shebang. Ms. Masto argued these allocations would initially "save or create" 73 jobs.

Lawmakers should revisit a plan that allows a single, partisan state official to take control of tens of millions of dollars and administer the funds in a way that easily could come to resemble personal or political patronage. A number of attorneys general, around the country, have opted to turn the settlement money over to their state Legislatures. But some see a pattern developing in how Democratic attorneys general are endeavoring to use much of the $1.1 billion that will pass into their hands.

"Five big banks have agreed to give 23 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," is the way Tucker Carlson's Washington-based Daily Caller reported the deal.

Once the attorneys general cash their checks, the funds "will be difficult to track," warns Tom Fitton, president of Judicial Watch, a law firm that promotes transparency in spending. Some of the money may be sent to advocacy groups allied with Democrats, according to Dan Epstein at Cause of Action, which tracks corruption in federal funding.

The money also can be transferred through multiple federal or state agencies, Mr. Epstein said. For example, Affordable Housing Centers of America - a Chicago-based ACORN offshoot - has received funds through Illinois' housing finance agencies, he said.

If the money were going directly to people who were victimized by robo-signings - although they weren't paying their mortgages, regardless - that would be one thing. But if this money builds up political fiefdoms and funds community organizers with political agendas, lawmakers in Carson City need to offer a lot more oversight than we saw last month.