Today, the largest one-time Big Bank penalty/'settlement' for overdrawing on the American public will be paid by the
second largest U.S. bank holding company, Bank of America. A $16.65 billion slap on the hand,
issued by the DOJ (Department of Justice), surpasses the $13 billion fine
JP Morgan Chase had to pay in 2013. Bank of America is being fined for what the office of one
federal district judge calls 'fraudulent and reckless lending activities by a financial institution leading up to the financial crisis in 2008."
This is good news for some of the struggling consumers who will have their principals reduced and their mortgage loan terms eased with $7 billon of the settlement.
This isn't the only fine Bank of America has had to pay for financial abuses. In a ruling on July 30, Federal District Judge Jed Rakoff ordered Bank of America to pay a $1.27 billion fine for fraud perpetrated by Countrywide Financial Corp., a mortgage company the bank acquired in 2008. When issuing the ruling, Rakoff said:
"It was from start to finish the vehicle for a brazen fraud by the defendants, driven by a hunger for profits and oblivious to the harms thereby visited, not just on the immediate victims but also on the financial system as a whole."
According to
RT.com:
In March Bank of America agreed to pay $9.5 billion to settle a similar investigation by the Federal Housing Finance Agency (FHFA).
In total, since the financial crisis, the bank (Bank of America) has paid out around $60 billion in fines, to settle claims, and buyout mortgage bonds.
Bank of America, along with one of the largest issuers of bad mortgage loans, Countrywide Financial, and Merrill Lynch, sold $965 billion in bad mortgage bonds between 2004 and 2008. Almost three quarters of them were issued by Countrywide Financial.
So, Bank of America allegedly rips off American consumers, and the financial system, for $965 billion, and has to pay under $100 billion in penalties. I'd say they came out ahead -
way ahead. I don't mean to be a Debbie Downer. I'm glad they are paying billions to consumers, but where are the arrests? And what incentive do they have to stop engaging in financial fraud, when the profit clearly outweighs the cost?
By law, since consumer relief isn't considered a fine or penalty, Bank of America could use the reported $7 billion cost of consumer relief, as a tax deduction - as if this were a mere business transaction rather than consequences for criminal activity. This bank stole from everyday people who were trying to build a life. They killed the dreams of many who will never recover. Yet BOA is eligible for billions in tax deductions? It's not hard to imagine all the good that tax money could do to help people in this country. Instead, in the form of tax savings, it goes back into the pockets of the perpetrators who committed the crime in the first place.
According to a recent and extensive
New York Times article, there are more skeptics holding off doing a happy dance over the settlements. Dennis Kelleher, head of
Better Markets, a nonprofit group critical of Wall Street had this to say:
“… this shows DOJ is tough on Wall Street. But, unlike other recent settlements, will DOJ provide the public with the key information on investor losses, Bank of America profits, the names of involved executives, specific laws broken and the actual systemic illegal schemes and activities?”
My first thought, "In a perfect world."
Too big to fail? Well, Big Banks can fail a little bit, but they are clearly still too big to jail. Thankfully, Elizabeth Warren and Bernie Sanders continue to put forth the same questions as Kelleher, to push and prod at the most corrupt in the corporate world, and to demand the DOJ and the guilty remain accountable.
Earlier Daily Kos post about the settlement, by Kossack Tasini.