A group of state attorneys general have been working on a settlement with the nation’s biggest banks, under which the banks would devote a certain amount of money to foreclosure relief, in exchange for avoiding litigation over their myriad abuses that arose during the foreclosure fraud scandal (including the use of “robo-signers.”)

However, the settlement is on shaky ground after federal regulators broke with the AG’s and cut their own (weak) deal with the banks, and several Republican AG’s publicly questioned whether the banks should have to engage in any foreclosure prevention efforts at all, despite their mortgage servicing abuses.

Previously, the Republican attorneys general of Virginia, Texas, Florida, South Carolina, Oklahoma, Nebraska, and Alabama sided with the banks, with radical Republican Attorney General Ken Cuccinelli (VA) deriding foreclosure prevention as “welfare.” Now, an eighth Republican AG, Georgia’s Sam Olens, has also taken the banks’ position:

Georgia Attorney General Sam Olens said he has “significant concerns” about a proposal to reduce loan balances for some homeowners as part of a settlement of a nationwide foreclosure probe, joining at least seven other states that have criticized such a plan…“You’re declaring in advance who the winners and losers are,” Olens said. “I’m a little concerned that this process disengages the normal market forces.”

In reality, the proposed settlement lets the banks off too easy, as the loan reduction amount that has been floated (about $20 billion) wouldn’t be enough to seriously alleviate pain in the housing market. And any settlement that doesn’t involve banks reducing loans amounts to letting the banks off the hook for their prior abuses and counting on vague promises that they’ll avoid such abuse in the future.

A recent report from the International Monetary Fund showed that the effect of more aggressive loan reductions on bank balance sheets “is likely to be limited,” and several of the banks involved in the settlement discussions are back to making sky-high profits. But instead of pushing for help for homeowners, Republican AG’s are siding with the banks, advocating that they receive a slap on the wrist for their flagrant violations of the mortgage servicing process.

One year ago, Bloomberg News reported that Wachovia Corp. — one of the biggest banks in the U.S. — “had made a habit of helping move money for Mexican drug smugglers.” Wells Fargo & Co., which acquired Wachovia a couple of years ago, admitted in 2010 that it “failed to monitor and report suspected money laundering by narcotics traffickers — including the cash used to buy four planes that shipped a total of 22 tons of cocaine.” The case was later settled for about $110 million and Wachovia paid another $50 million in fines for failing to properly monitor the transfer of $378.4 billion from currency exchange houses in Mexico. The charges were dismissed.

It turns out, Wachovia had been receiving warnings for years from a senior anti-money laundering officer in its own London office, Martin Woods. Yet, Woods’ words of caution weren’t only met with indifference. Wachovia reportedly retaliated against Woods and essentially drove him out of his job. The Observer recently reported:

Rather than launch an internal investigation into Woods’s alerts over Mexico, Woods claims Wachovia hung its own money-laundering expert out to dry. [...] On 16 June Woods was told by Wachovia’s head of compliance that his latest SAR [suspicious activity report] need not have been filed, that he had no legal requirement to investigate an overseas case and no right of access to documents held overseas from Britain, even if they were held by Wachovia. [...]

“Wachovia had my résumé, they knew who I was,” says Woods. “But they did not want to know – their attitude was, ‘Why are you doing this?’ They should have been on my side, because they were compliance people, not commercial people. But really they were commercial people all along. We’re talking about hundreds of millions of dollars. This is the biggest money-laundering scandal of our time.

At some point, Woods received a letter from the bank’s compliance managing director which accused him of failing “to perform at an acceptable standard.” In 2008, Woods sued Wachovia for bullying and detrimental treatment of a whistleblower. Wachovia settled that case too and agreed to pay an undisclosed amount under the condition that Woods leave the bank.

To this day, not a single bank has been indicted for violating the anti-money-laundering Bank Secrecy Act. Meanwhile, foreign government agencies in the United Kingdom, Mexico, and Colombia, along with the United Nations Office on Drugs and Crime have all reportedly documented money laundering by the banking industry. According to Al Día, financial institutions such as Bank of America, American Express, Western Union, the Mexican offices of Citigroup, the European HSBC and Banco Santander have all “helped move money for Mexican cartels.”

Meanwhile, the drug war has claimed the lives of at least 35,000 people since 2006 in Mexico alone. Senior U.S. commanders told the Senate Armed Services Committee last week that Mexico and Central America make up one of the most dangerous regions in the world, rivaling the conflicts in Iraq and Afghanistan. And as the U.S. continues to pour millions of dollars into fighting the drug war in Mexico, U.S. drug users contribute approximately $40 billion a year to Latin American cartels — money which apparently often ends up passing through U.S. banks.

Writing today in the Nation, Mark Ames and Mike Elk reveal that Koch Industries mailed a letters to 50,000 employees instructing them on who to vote for in the 2010 midterm elections. The Koch packet given to employees included candidate names, a letter from a Koch lobbyist, and a right-wing screed from the company and the Washington Examiner, an outlet owned by Phil Anschutz, a billionaire who is close to the Koch family. (View a copy of the packet here.)

Corporate coercion of employees is perhaps the most profound repercussion from the Supreme Court’s Citizens United decision last year. The Nation spoke to several law experts who noted that “Citizens United frees Koch Industries and other corporations to propagandize their employees with their political preferences.” Before the decision, businesses were prohibited from instructing their employees to vote a certain way.

Not only was Koch active in helping push the Citizens United decision (several of the groups filing amicus briefs supporting unlimited corporate spending were funded by Koch), but Koch actively planned for exploiting the decision. When we exposed a memo outlining the 2010 secret Koch political strategy meeting with fellow right-wing donors, we noted that the summit included a presentation from Karl Crow. Crow is a Koch operative who had penned a memo calling for corporations to exploit Citizens United and aggressively use “employees, vendors, and customers” as tools for advancing business interests in the political sphere:

She predicts the Citizens United decision will correct the law’s imbalance and open the door for businesses to educate “their employees, vendors and customers about candidates and officeholders whose philosophies and voting records would destroy or permanently damage America’s free enterprise system.” For many nonprofits the Citizens United decision creates a host of new political opportunities in the 2010 elections and beyond. Under the ruling, trade associations like the U.S. Chamber of Commerce, classified as a 501(c)(6) group by the IRS, and 501(c)(4) grassroots advocacy groups like Americans for Prosperity can now use general treasury funds to produce communications materials opposing or supporting specific candidates and legislation. In a memorandum Mitchell outlined the new communications possibilities for 501(c)(4)s and 501(c)(6)s. They include voter guides, candidate questionnaires, voting records and public advertising.

Currently, Crow is heading up a vast new Koch-funded project called “Themis” to mobilize voters for the 2012 election cycle.

ThinkProgress has covered this disturbing trend of corporate political coercion since 2009. While researching the health insurance industry’s efforts to kill health reform, we discovered that a consulting firm called Democracy, Data and Communications (DDC) that actually specializes in helping large corporations organize their employees into mini-lobbyists. DDC currently consults for Koch, the U.S. Chamber of Commerce, several banks, the tobacco industry, and health insurance companies.

During his budget speech last week, President Obama revived his proposal to allow the Bush tax cuts for the wealthiest two percent of Americans to expire, prompting a predictable backlash from Republican members of Congress. But some House Republicans, in an effort to justify extending tax cuts for the very wealthiest Americans, have resurrected a lie about the amount of taxes paid by the wealthy. These Republicans have been falsely claiming that the richest one percent of Americans pay 40 percent of all federal taxes:

REP. MICHELE BACHMANN (R-MN): Well, remember, again, already the top 1 percent of income earners pay about 40 percent of all taxes into the federal government.

REP. JAMES LANKFORD (R-OK): They are saying our budget is completely imbalanced because we don’t tax major corporations more and we don’t tax wealthy individuals more. I’m thinking the top 1 percent already pays 40 percent of the taxes in America.

While the richest one percent of Americans do pay about 40 percent of the total federal income taxes paid in the country, that’s a far cry from 40 percent of overall taxes. Even those working Americans who don’t make enough money to have federal income tax liability pay federal payroll and excise taxes, which fall much harder on the middle-class and low-income individuals than those at the upper end of the income scale.

Once all taxes are taken into account, according to the Congressional Budget Office, the richest one percent of Americans pay about 28 percent of total federal taxes, which is right in line with their 25 percent share of total income. And therein lies the real story: the richest one percent of Americans pay such a large share of federal income taxes because they make such a large share of the overall income:

Income inequality in the U.S. is currently the worst its been since the 1920s. Just the richest 400 Americans hold more wealth than the bottom 50 percent of Americans combined, and the richest 10 percent of Americans control two-thirds of the country’s net worth.

To House Republicans, though, this wealth concentration is a reason not to raise taxes on the very rich. A new Washington Post-ABC News poll out today shows that 72 percent of Americans support Obama’s proposal to raise taxes on the richest Americans to reduce the deficit, while large majorities oppose the GOP’s proposals to cut Medicare and Medicaid.

Republicans in both chambers of Congress have been laying out various demands that they want in return for raising the nation’s debt ceiling, even though failure to raise the debt ceiling would have widespread negative consequences for both the U.S. and the world economy (which many in the Republican leadership have admitted). Republicans have demanded everything from amorphous spending cuts and caps to corporate income tax cuts and reductions in Social Security.

2012 Republican presidential hopeful Newt Gingrich was on CNBC last night, laying out his own ideas for what the GOP should hold out for when it comes to the debt ceiling. He suggested that Republicans should not vote to raise the debt ceiling unless Medicaid is converted into a block grant system:

If I was looking at one big decision for the debt ceiling, I would put on there block granting Medicaid. If we sent Medicaid back to the states — its the second biggest health entitlement after Medicare — we clearly don’t know how to run it at a federal level, they’re averaging over ten percent of the money going to crooks in New York State under the federal-run Medicaid. If we would send it back to the fifty states, allow them to try to develop new and better approaches, that would be a large enough change that it would justify a vote for the debt ceiling. But I would not vote for the debt ceiling without a very very significant change in the trajectory of spending.

Watch it:

It’s worth noting that Gingrich seems to think that whatever is the hot Republican priority of the moment should be attached to the debt ceiling. Back in March, he said “Republicans should attach the full repeal of ObamaCare to the debt ceiling increase bill and pass it immediately.”

As my colleague Igor Volsky noted, turning Medicaid into a block grant system would basically destroy it. Under such a plan, states would be forced into “capping enrollment, cutting eligibility, limiting mandatory benefits and lowering provider reimbursements.” Currently, two-thirds of Medicaid’s costs go towards care for seniors and people with disabilities.

A new Washington Post-ABC News poll released this morning shows that 69 percent of Americans oppose cutting Medicaid to reduce the deficit. 52 percent of Americans strongly oppose such cuts. But Gingrich wants Republicans to threaten the credit-worthiness of the United States and the stability of the global economy in order to force these widely unpopular and destructive cuts through.