COMMENTARY: An insufferable trifecta for the poor

We’ve seen it before, and we’re likely to continue to see it again.

On a positive note, earlier this month, Delaware Attorney General Matt Denn announced a cease-and-desist settlement with Santander Consumer USA Holdings Inc. that addresses the exploitation of applicants for subprime auto loans.

Attorney General Denn’s success in negotiating this settlement merits our collective applause for many reasons: identified victims of predatory practices are made whole for loss they have suffered; the state of Delaware announces through such action that the public interest in fair lending practices will be vindicated when violations of law are uncovered; and Attorney General Denn underscores that his office will devote necessary resources to root out such conduct.

Rashmi Rangan

Early this year, Delaware was one of 21 states, along with the District of Columbia, that joined with the U.S. Department of Justice in the settlement of a similar series of suits — this time filed against Moody’s Corporation and its related entities — that alleged that Moody’s violated federal laws by manipulating credit ratings during the mortgage crisis.

Of the nearly $864 million that Moody’s must pay the federal government and the states, Delaware will receive a little less than $8 million. Now we’re facing the same scenario. The state is facing a $386 million budget gap.

The money from the Moody’s settlement would cover less than 2 percent of that shortfall, but we’re virtually certain that our lawmakers will play the same shell game that they employed two years ago. We urge the state to use these funds for the right purposes and not something as unrelated as farmland preservation.

Three years ago, the state of Delaware received more than $45 million as part of the settlement of a series of lawsuits filed by the U.S. Department of Justice and six states against several financial institutions, alleging that they violated federal and state laws during the mortgage crisis of nearly a decade ago.

Under the terms, more than $30 million was to be used for programs to benefit persons who had suffered from the mortgage crisis or set up programs to redress mortgage fraud.

Instead, the Delaware General Assembly, facing a financial crisis, took the funds to balance the state budget. The maneuvering outraged DCRAC, the Delaware Community Reinvestment Action Council, a tiny nonprofit that assists low-income individuals with their banking, taxes, credit, and housing problems.

We wrote letters, pleaded with our government, wrote to the U.S. attorney general and finally filed a lawsuit. Ultimately, some of that settlement money was directed to related agencies.

We recognize that Delaware may not have enough revenue this year to meet the needs of all it was created to serve: public health, public safety, public education, public welfare, and the common good.

But our legislators and our governor must stop this nonsense of making a designated dollar disappear from one fund only to show up in another where lobbying interests carried the day by trampling on the rights of those less fortunate.

In these settlements, those less fortunate, those already abused in ways unimaginable to most of us, have hit an insufferable tri-fecta: they’re low-income, they’re exploited by banks and other sources of commercial borrowing, and then, when help seems on the way, monetary relief sought on their behalf by the state proves to be an illusion.

As this process moves forward, we feel compelled to ask: Where the public trust has been endowed with funds with the promise to make whole persons and communities that have been wronged by predatory practices, by what authority do our lawmakers redirect such funds for wholly unrelated purposes?

EDITOR’S NOTE: Rashmi Rangan is executive director of DCRAC, the Delaware Community Reinvestment Action Council Inc.

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