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.
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.”
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.
- 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.
- 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.