Gov. Cuomo was hit from the left on Saturday when the Working Families Party sided with state Attorney General Eric Schneiderman in a boiling dispute over who gets to spend $600 million from a housing foreclosure settlement.
Schneiderman, who negotiated the settlement with JP Morgan Chase, said he has sole discretion on how to spend the money over four years — and wants it to go to struggling homeowners. Cuomo said he and the Legislature should decide how the cash is spent.
“Pulling a reverse Robin Hood, by taking money meant to help get the poor back on their feet, and giving it to the rich for more tax breaks they don’t need, will only expand the inequality gap. This money should go where it’s needed most – to help underwater homeowners victimized by Wall Street’s subprime crisis,” said Working Families Party National Director Dan Cantor.
Cuomo has run on the party’s line in the past. The Working Families Party also has close ties to Mayor de Blasio.
Cuomo’s budget plan proposes $2 billion in tax cuts over the next three years – though it doesn’t count on the settlement money, an Albany source said.
Bertha Lewis, president of the Black Insitute and former head of ACORN, said, “What I want to know is WTF? Why take our funds? This settlement money was intended to help struggling homeowners in New York, too many of whom are African-American and Latino.”
But others sided with Cuomo, arguing that Schneiderman shouldn’t be given a $600 million slush fund.
“This is state money that should go into the general fund. It’s a matter for the governor and the Legislature to decide. The attorney general is not equipped to account for spending money of that magnitude,” said Elizabeth Lynam of the Citizens Budget Commission, a business-backed fiscal watchdog group.“There should be more checks and balances.”
The Schneiderman-JP Morgan settlement says the money can be dedicated to “funding for housing counselors, state and local foreclosure assistance hotlines, state and local foreclosure mediation programs, legal assistance, housing remediation and anti-blight projects” and other anti-fraud and consumer protection initiatives.
One Albany insider claimed the wording of the settlement gives Schneiderman the authority to dole out money to favored advocacy groups, as well as homeowners.
“This is obvious quid pro quo: the new ACORN and WFP, both of which have been investigated for financial impropriety, are advocating for Attorney General Eric Schneiderman to have the largest member item of all time because under the settlement they stand to get a piece of the pork,” the source said.
But reps for New York Communities for Change and WFP said Saturday they’re not eligible to receive settlement funding.
Supporters of the Schneiderman housing settlement will hold a Tele-Town conference on Sunday to oppose Cuomo’s attempt to obtain control of the funds. It notes that 325,454 New York homeowners have received foreclosure notices.
Schneiderman said he and Cuomo are working toward compromise.
“Attorney General Schneiderman and Governor Cuomo are working collaboratively to ensure that the settlement funds are used to help New Yorkers affected by the housing crisis. Rumors of any disagreement are greatly exaggerated,” said the AG’s spokesman, Matt Mittenthal.
Cuomo’s office declined comment.
Meanwhile a former AG staffer also said it’s a phony controversy because no one questions that the money is supposed to be used for housing, as dictated in the settlement. But the AG should not have sole say over the allocation without input from the governor and state lawmakers.
“Past Attorney’s General cleaned up members items, but this one wants to go into the member item business with the mother of all member items for himself,” the source said, referring to pork barrel grants.