The First State’s use of some of its bank settlement funds is being challenged in court.
The Delaware Community Reinvestment Action Council Monday filed suit in the Court of Chancery claiming state officials used portions of $31 million it received from Bank of America in a manner inconsistent with its settlement agreement with the bank.
The housing non-profit’s executive director Rashmi Rangan argues the agreement is “clear and unambiguous” that the funds are to be used to assist low income communities hurt by the 2008 housing crisis, but the state is instead using a significant portion of it to balance this year’s state budget.
The suit – which names the state, Gov. Jack Markell, Delaware Treasurer Ken Simpler and State Controller General Michael Morton as defendants, seeks relief for that use of the funds and an injunction to keep lawmakers for using any more of it for next year’s budget.
Rangan previously reached out to state officials about use of the settlement money and asked U.S. Attorney General Loretta Lynch to investigate. She says she now sees a lawsuit is the only remedy to the situation.
"Unless enjoined and restrained by judicial order, the Governor and other elected Delaware officials will shamelessly transfer funds intended for poverty stricken communities of mortgage fraud to programs that are wholly unrelated to Delaware's legal authority to demand and receive $31 million from Bank of America and, in exchange for which, Delaware now holds harmless Bank of America from legal actions that could arise from a host of administrative and civil claims under Delaware statutes and common law," read Rangan's statement.
