Statesman – Effort to save economy wrecks legal aid for poor

Rock-bottom interest rates, part of the Federal Reserve’s attempt to prop up a crumbling economy, are having an unintended but devastating impact on legal programs for the poor.

Nonprofit groups in Texas are bracing for layoffs and massive cuts to their client lists in 2010 as the biggest source of legal aid funding — the interest on $1.1 billion in bank accounts in which lawyers deposit their clients’ money — has all but disappeared as rates have plummeted.

Annual grants are expected to fall by at least 75 percent next year for agencies that address life-altering legal problems, including consumer scams, child-custody disputes, home foreclosures, missing child support, improper institutionalization and many other noncriminal issues.

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