A Delaware nonprofit is threatening court action over the state's use of tens of millions of dollars it secured in settlements with major financial firms stemming from the credit crunch, The News Journal of Wilmington reports.
The Delaware Community Reinvestment Action Council notified top state officials last month that it has prepared a legal complaint following legislators' allocation of $31 million from deals with Citigroup and credit-rating agency Standard & Poor's to close a gap in the state's fiscal 2016 budget. Lawmakers, who had access to $61 million this year from those settlements and another with Bank of America, opted to save the remaining funds for potential use in next year's budget.
The funds were intended to remediate harm S&P and the big banks were accused of causing by promoting risky, mortgage-backed securities. Rashmi Rangan, executive director of the nonprofit, called on state leaders to earmark $31.6 million for programs for affordable housing, economic development, and schools in low-income areas.