Do you know someone whose life has been affected by foreclosure? Chances are, in 2012, you do. That’s why it’s so important that you know the story of what Scott Walker did with the funds meant for victims of foreclosure fraud.
Working America members drove over 55,000 letters and calls to help secure these funds to help homeowners. Instead of using them for their intended purpose, Walker used a loophole to transfer millions into his state budget, bypassing struggling homeowners and fraud victims completely.
First, let’s give some context. For years, big banks like Citigroup and Wells Fargo engaged in fraudulent practices that resulted in thousands of foreclosures and thousands of Americans losing their homes. All too frequently, the banks issued foreclosure notices without reviewing paper work or even double-checking that they owned the home.
In a now infamous process called “robo-signing,” employees at these banks approved hundreds of foreclosure filings daily. “It’s exactly like an assembly line,” according to an insider account at Wells Fargo:
Unqualified employees with salaries ranging from $30,000 to $50,000 are given titles like “vice president of loan documentation” so they can sign foreclosure documents. Actual supervisors institute quotas on employees, forcing them to sign a certain number of foreclosure files each day — sometimes telling them they can’t eat breakfast or take lunch until they’re done. Documents required for homeowners to avoid foreclosure were ignored, left sitting on an unattended fax machine.
Over time, sources revealed that these practices occurred at all the major banks for years. The Obama Administration, working with 49 state Attorneys General, sought to hold those banks accountable. In February 2012, they reached a $26 billion settlement with the five biggest banks to be distributed among the states to assist the victims of these fraudulent practices.
(Working America and other groups fought for a much bigger settlement – more on that here.)
Now, to Scott Walker. For its share, Wisconsin got $140 million from the settlement. The majority of those funds legally had to go directly to help struggling homeowners, but thanks to a loophole in the settlement language, $31.6 million of that amount was discretionary, “to compensate the state for costs resulting from the alleged unlawful conduct of the defendants.”
Walker had $31.6 million, funds intended to help alleviate the economic pain of Wisconsinites who had lost their homes or were underwater – thanks to the negligent activity of big banks.
Like all of his policies in his first two years in office – the cuts to education, the stripping of collective bargaining rights from public workers, the effective tax hike on working families – Walker used the excuse that his state was “broke.” And yet, Walker somehow found the money for a costly voter suppression law, as well as hundreds of millions of dollars in tax breaks for the very interests that elected him.
In last night’s debate, Tom Barrett pointed out that Walker’s raid on the foreclosure funds was a second “bait and switch” perpetrated on Wisconsin foreclosure fraud victims and struggling homeowners. That’s correct, but Walker’s actions also had a broader effect: inspiring other Governors to follow his lead. In Missouri, Ohio, South Carolina, Arizona, and elsewhere, desperately needed funds were diverted. New Jersey Governor Chris Christie, who has campaigned for Walker, became the latest follower this week; he diverted $75 million from the settlement into his general budget. ProPublica estimates that in total, $1 billion meant for fraud victims has been used for other purposes.
But Scott Walker, who announced his attentions just hours after the national settlement, led the way.
Foreclosure isn’t a partisan issue. Our members are uniformly enraged at the activities of the banks, who for years perpetrated massive fraud on the public. And when Wisconsinites go to the polls, they should remember who Walker fought for, and the example he set for the nation. A vote for Tom Barrett on Tuesday is a vote to protect future homeowners from politicians like Scott Walker, and those who follow them.