N.Y. Budget Blocks A.G. From Controlling Settlement Cash

The budget deal reached by Governor Andrew Cuomo and lawmakers would require New York’s attorney general to cede control of cash obtained from settlements to the governor and legislature.

The move would cap a fight between Cuomo and Attorney General Eric Schneiderman, a fellow Democrat, over New York’s $613 million share of a $13 billion federal-state settlement with JPMorgan Chase & Co. That November accord ended probes into the bank’s mortgage-bond practices and put the funds under Schneiderman’s supervision.

The provision, along with the rest of the $137.9 billion spending plan, is expected to be voted on in Albany today ahead of a deadline of April 1, the start of the fiscal year.

“Our concern has always been that the funds from Attorney General Schneiderman’s settlement with JPMorgan Chase be used for the purposes for which they were intended -- to help struggling homeowners in New York,” said Damien LaVera, a spokesman for Schneiderman, in an e-mail. “We will review the budget proposal through that lens.”

During the dispute with the attorney general, Cuomo aides said the state constitution already required settlement cash to be deposited in the treasury, which the governor and legislature control.

Split Deal

In January, the two officials agreed to split the first $163 million chunk of the payout. The budget Cuomo and legislative leaders agreed to March 28 directs the funds to housing programs.

The new provision won’t guarantee that money from settlements is distributed appropriately, said Blair Horner, the legislative director for New York Public Interest Research Group.

“This makes it less likely that settlement money will be used to address whatever problem is going to be litigated,” Horner, whose nonprofit advocates transparency in government, said in an interview in Albany. “Now the money will vanish into the budget black hole, where it may get used for those problems, but probably won’t.”

Rich Azzopardi, a Cuomo spokesman, didn’t immediately respond to a request for comment on the handling of future settlement cash.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE