Foreclosure relief money diverted by states

In February, 5 large banks (with the intervention of the Obama administration) negotiated a $25 billion settlement with the states requiring the banks to provide foreclosure relief to distressed homeowners. But the New York Times reported last month that at least 15 states are diverting the money for their general budget. Pennsylvania is not among those states listed by the Times as among the 15, but the Times' list was incomplete. This is another example of the government's solutions to the financial crisis missing the mark and failing to address the real issues.

Of course, in those states where the money actually reaches distressed homeowners, the money is merely reinflating the bubble and preventing prices from reaching the point where they should be in order for houses to be marketable again.