How should we think of Bank of America crimes? Pretend for a moment that you’re a master-criminal, or a major national or international banker (but I repeat myself), and you make trillions of dollars from swindling others. Then, the big, bad sheriff Eric Holder comes to town–ropes you into court–and hits you with a $17-billion fine, but no jail time.
Think you’d change anything about how you do “business”? Of course not.
You keep on going your merry way, ripping off the world, paying a few pennies in fines for every million you steal. Oh, and donating to political campaigns and the pet causes of your protectors.
Thus, RT.com reports:
While the US government touted its “record” settlement reached this week with Bank of America for mortgage fraud that helped fuel the 2008 recession, the details of the agreement indicate yet another slap on the wrist for an offending Wall Street titan.
Bank of America agreed to a $16.65 billion settlement with federal authorities for selling toxic mortgages and misleading investors, the US Justice Department announced Thursday.
“This historic resolution – the largest such settlement on record – goes far beyond ‘the cost of doing business,’” Attorney General Eric Holder said in a statement.
“Under the terms of this settlement, the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers, and communities affected by the bank’s conduct. This is appropriate given the size and scope of the wrongdoing at issue,” Holder added.
Yet the $7 billion in “relief” is considered a “soft money” fine, in which the bank will reduce some homeowners’ mortgages. Very few homeowners are eligible for the refinancing pursuant to the settlement, AP reported. Those who are eligible may need to wait years to see any settlement aid, as payouts will be ongoing through 2018.
Those already in the hole following a lost home due to foreclosure or a short sale – when a lender takes less money for a home than what the borrower owes – are unlikely to benefit from the terms of the settlement.
Outside of the $7 billion for consumers, the Bank of America settlement includes a $5 billion cash penalty and $4.6 billion in remediation payments. Large portions of the deal will be eligible to be claimed as business expenses, allowing the mega-bank to treat them as tax write-offs.
The deal echoes similar agreements the government reached with other Wall Street players such as JPMorgan Chase and Citigroup for crimes committed surrounding the recent economic recession.
JPMorgan Chase came to a $13 billion settlement in November. The $4 billion supposedly offered to homeowner relief has yet to benefit many in need, according to the advocacy group Home Defenders League. Citigroup reached a $7 billion deal with the government.
Critics of these deals have blasted the US government for its ongoing, lax attitude regarding mass crimes committed by powerful banks that, they say, are not adequately punished for wrongdoing.
I was recently reminded of how paltry this fine is compared to the $45-billion bailout Bank of America received.
The bailout is pennies compared with the profits reaped from the fraud. You have to look at the fraud against both the mortgagees and also those who later invested in the products as they were marketed to pension funds and other investors.
Then, there is the inestimable damage to the world economy from when these frauds blew up, and wounded the economy (which led to the bailouts). I’ve said it before: What Hank Paulson orchestrated was the greatest White Collar Crime in world history—by orders of magnitude.
But the bailouts are just a symptom. The banks also kept the profits from the fraud—and this piddly fine comes out of those mammoth profits as a loss of a penny or two from billions. This is what those big campaign donations buy—a get out of jail free card, and a winning lotto ticket for measureless fraud.