Friday, August 22, 2014

Justice For Sale

Bank of America Reaches $16 billion Settlement With U.S.:

The Justice Department said on Thursday that it had so far recovered nearly $37 billion from big banks for their role in selling shoddy mortgages before the financial crisis.

Such a large number — intended to deter misdeeds in the future — suggests that Wall Street is being made to pay for its role in stoking the subprime debacle. Yet the financial pain inflicted by the settlements may not be as great in the end.

Take the latest, and largest, mortgage settlement. Bank of America has agreed to a $16.65 billion deal with federal and state authorities. The actual financial burden for Bank of America, however, may not exceed $12 billion — certainly a large amount, but one significantly less than the number the government trumpets.
And get this: a lot of it can be written off on their taxes (i.e. YOU the taxpayer are going to pay for it). It's like you robbing someone on the street then having the victim pay a portion of your fine.
The actual pain to the bank could also be significantly reduced by tax deductions. Tax analysts, for instance, estimate that Bank of America could derive $1.6 billion of tax savings on the $4.63 billion of payments to the states and some federal agencies under the settlement. Shares of Bank of America jumped 4 percent on Thursday, suggesting investors believe that the bank could take the settlement in stride.

“The American public is expecting the Justice Department to hold the banks accountable for its misdeeds in the mortgage meltdown,” said Phineas Baxandall, an analyst with the U.S. Public Interest Research Group, a consumer advocacy organization. “But these tax write-offs shift the burden back onto taxpayers and send the wrong message by treating parts of the settlement as an ordinary business expense.”
For those who have inquired, this is why I think Eric Holder is the worst AG the United States has ever had. Yes, he's done a lot to help reform the criminal justice system, criminal sentencing, and the like. And his visit to Ferguson, MO this past week was well-timed and thoughtful in helping defuse the situation.

But it's astonishing that for this crime of the century, a crime so vast and huge it dwarfs literally every other financial or violent crime ever committed in United States history, not one single person went to prison for it.

What crimes did they commit, you say?
Documents released as part of the $16.65 billion settlement between Bank of America and the Justice Department read like a highlight reel of the mortgage sins that fed the 2008 financial crisis. As part of the deal, the bank and the Justice Department agreed to a “statement of facts” that offers a window into some of the darkest corners of the Countrywide and Merrill mortgage machine that was responsible for funneling a stream of troubled loans that helped devastate the global financial system.

The Justice Department documents also show the failings of the government’s efforts to protect itself against insuring defective mortgages.

One Bank of America employee describes trying to “trick” a system that screened mortgages that the Federal Housing Administration agreed to insure.
Only on Wall Street is "trick" an acceptable euphemism for fraud. 

I wonder how that would hold up on the street level? "No officer, I wasn't robbing the Quick Mart, I was trying to trick them into giving me money. That's all." Or, "Instead of prison time, can't I just settle with the DA?"

Holder et al (including the president) have said repeatedly that we need to "look forward, not backward" when it comes to the crimes of Wall Street. I wonder how victims of street crime would feel about that? "Rather than prosecuting this rapist or mugger or molester, I think it's better we look forward, not backward, and learn from these unfortunate events." Ugh.

It's the ultimate, ignominious ending to the biggest criminal enterprise ever at work in United States history. Pay your fine (most of which will be written off, thus footed by the taxpayer) and go on about your ways (for more, go here).

I can guarantee you two things: 
  1. If these sociopaths on Wall Street knew they were facing hard time in prison, with razor wire, barking dogs, solitary confinement, and sexual assault, this kind of criminal conduct would never have taken place. 
  2. Because they know in the future they'll never go to prison and can pay their way out of the legal system, this shit will happen again.

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