Call it a sharing of the spoils of war at an opportune time..
Just as he qualifies for a reelection bid, Mississippi Attorney General Jim Hood is handing over around $46 million to Gov. Phil Bryant and the Legislature from legal settlements obtained from the likes of Standard & Poor’s, Merck & Co., HSBC Bank and Bank of America.
He deposited $20 million on Feb. 5 and expects to get $26 million in settlement money from S&P by March 5. The ratings agency settlement followed claims by Mississippi and a handful of other states and the Justice Department that S&P misled investors when it rated structured finance securities in the lead-up to the 2008 financial crisis.
In his notification to Bryant and legislative leaders, Hood gave a list of suggested expenditures he said were in line with his statutory obligation “for improvement of the public service.”
The requests center on housing the state’s mentally ill, helping inmates reenter society and making pay levels of staffers at the Attorney General’s Office competitive with other states, Mississippi state agencies and local district attorneys’ offices.
Expenditure requests include:
>>>Allocating money for planning and construction of a new facility to house the criminally insane. The Bureau of buildings has recommended spending $600,000 in 2016 for pre-planning of a new Forensic Unit and $15 million for construction in 2017. The unit would have 60 to 70 beds and would be up to modern standards. “The current
The forensic unit at the State hospital at Whitfield was constructed sometime in the early to mid 20th century,” Hood said, and noted cells at the Whitfield unit are secured with padlocks and a ring of keys.
The 35-bed unit, Hood said, “is entirely insufficient to meet the needs of Mississippi’s 82 counties.”
The space squeeze forces the Department of Corrections to move someone out before bringing someone in, according to Hood. “As a result, defendants in need of forensic evaluation languish in county jails.”
>>>Allocating about $2.2 million for housing and rental help for the mentally ill. He had asked for $364,000 to offset a deficit in the current fiscal year and $1.8 million for fiscal 2016 to the Mississippi Home Corp. for dedicated supported housing and rental assistance.
“This would be a small amount to pay in order to facilitate proper, humane treatment of our mentally ill,” he said, warning that it will be far more expensive for the state if the Department of Justice sues the state.
>>>Allocating $75,000 to offset the Judicial Performance Commission’s budget shortfall. The $2 assessment on criminal fines has not been sufficient to fund the Judicial Performance Commission, Hood said.
>>>Allocating $3 million for an inmate reentry pilot project. The project would create 100 minimum security beds for felony inmates who have completed their sentences and are about to reenter society, Hood said. “From this facility they would work during the day and receive drug, mental health, religious and life-skill counseling to prepare them for their release.”
>>>Allocating $800,000 this year to bring the salaries of Attorney General staff members up to the regional averages of surrounding states. Louisiana, Tennessee, Arkansas and Alabama pay their AG lawyers significantly more than Mississippi, according to Hood. “In addition, other Mississippi state agencies and district attorney offices are luring my best employees away with offers of higher pay which I cannot match,” he said.
He also asked legislators to allow flexibility on statutory limits he said are arbitrarily placed on staff salaries. He emphasized he is not asking for a salary adjustment for himself.
Republicans have tried the past couple of years to limit the authority of Hood — Mississippi’s lone Democrat elected to a statewide office – to pursue litigation. This year, GOP lawmakers want legislation passed that would require Hood to seek permission from an appointed board before taking legal action.
Hood said the effort to tie his hands stems from a desire by some state leaders “to serve the special interest of big business.”
Hood called the legislation an infringement on his constitutional authority as the state’s chief legal officer. “It is not appropriate for the legislative ranch, or other executive office holders to determine which cases need to be brought; such as the S&P / Moody’s cases,” he said in an email reply to questions about limiting the AGT’s litigation options.
“Those persons wishing to interfere with or weaken the Office of the Attorney General have motives that are to serve the special interest of big business – which is not an appropriate role for the state’s chief legal officer.”
He said there is no way that S&P and Moody’s acted in the “interest of our people and the small businesses and pensioners.”
Hood obtained the settlement by signing on early to an effort by then-Connecticut AG Richard Blumenthal (now a U.S. senator) to go after S&P and Moody’s rating services for their roles in the financial crisis of the last decade. The litigation challenged the neutrality and truthfulness of ratings awarded to mortgage-back securities by both S&P and Moody’s..
The suit that led to the settlement with S&P sought to disgorge S&P of its “ill-gotten gains from the rating of mortgage-backed securities,” Hood said.
Mississippi argued that the ratings services violated the state’s consumer protection laws. “The credit rating agencies may have the right to ‘puff’ (lie) under the 1st Amendment,” Hood said, “but they had no right to mislead investors under the state” consumer protection laws,
Litigation against Moody’s is continuing.
A $687.5 million share of the S&P settlement will be paid out to Mississippi and 18 other states and the District of Columbia. The Department of Justice, which joined suit after Connecticut and Mississippi initiated it, will keep an equal amount.
As a “lead” litigant, Mississippi’s share comes to $36 million. Hood’s letter to state leaders specifies that $26 million of that is expected by March 5.
Other legal settlements that make up the $46 million headed for state coffers are: Discover Financial, $1,932, 818; JP Morgan Chase, $1,976,407; Bank of America, $1,217,462; Citibank, $1,303, 783; HSBC Bank, $2,308,352; Merck & Co.-Vioxx, $9,688,463; AU Optronics-Chi Mei Optoelections, $1,472,708.
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