Governor Scott Walker is defending himself against criticism over how Wisconsin plans to use its portion of a $25 billion settlement with five major mortgage lenders. Wisconsin will received about $140 million under the multi-state deal announced Thursday.
Most of the money will be directed to help those hurt by the foreclosure crisis, with funds used to compensate people with bad mortgages or who lost their homes because of industry practices. However, about $26 million is being placed directly in the state’s general fund to help cover a projected budget deficit at the end of the biennium.
Milwaukee Mayor Tom Barrett says the move is “unacceptable and is certainly a violation of the spirit of the settlement.” Barrett says all of the money should go to help those hurt by the scandal, particularly hard hit areas of Milwaukee where many foreclosed homes remain vacant and in disrepair.
AUDIO: Mayor Tom Barrett (:21)
Barrett compared the diversion to the same “bait and switch” that was used to trick many people into refinancing loans, which ultimately caused the meltdown in the mortgage industry.
Governor Scott Walker on Thursday defended the decision. Walker says there was “direct damage done to the state of Wisconsin” by the financial crisis, and many other states are taking a similar approach with at least a portion of the settlement money.
AUDIO: Gov. Scott Walker (:13)
Walker also notes the majority of the money will go directly to those most impacted by deceptive industry practices.
The governor also deflected criticism that he attacked previous administrations for using one-time funding in similar ways, such as raids on the tobacco settlement fund. Walker says those previous issues had “nothing to do with the economy,” unlike the direct impact the foreclosure crisis had on Wisconsin.
WUWM contributed to this report.
