From Bloomberg
The six biggest U.S. banks, led by JPMorgan Chase & Co. (JPM) and Bank of America Corp., have piled up $103 billion in legal costs since the financial crisis, more than all dividends paid to shareholders in the past five years.
That’s the amount allotted to lawyers and litigation, as well as for settling claims about shoddy mortgages and foreclosures, according to data compiled by Bloomberg. The sum tops the banks’ combined profit last year
.
I have a few quick thoughts about this news:
First, I have no sympathy for the banks. They made their business decisions and need to live with the consequences. They screwed over a lot of people - both directly and by trashing the economy. I'm happy to see some legal action.
Second, I didn't really expect to see this happen. During the worst of the recession, it looked like the banks were getting a bailout instead of paying for the damage they caused. It feels good to finally see that they are not totally off the hook.
Third, I wonder about the timing. Later in the artticle is this item:
Investigators may be stepping up efforts now that the economy has recovered and the solvency of the nation’s banks is no longer in doubt, according to Daniel Hurson, a former U.S. prosecutor and Securities and Exchange Commission lawyer who runs his own Washington practice.
“There may be a sense that financial institutions have gotten away with a lot and maybe now is the time to catch up,” Hurson said.
I wonder if this was just good judgement on the investigator's part, or if the Fed or someone else twisted some arms to get them to wait a while?
And last, I wonder where all those billions of dollars are going. Lawyers and litigation, as well as for settling claims according to the article - I wonder what the mix is? How much is going to the people who got screwed, and how much is a wealth transfer within the 1% - from rich banks to rich legal firms? Is this just a show to make us feel good while the 1% just swap assets around?
In any case, at least something is happening to the banks that had so much culpability for the recession.