The Bank of America said today its $4 billion in legal expenses in the second quarter wiped out a big portion of its profits. $4 billion for lawyers? The legal bill was for reaching an agreement with American International Group to settle mortgage securities litigation (when AIG filed the lawsuit in 2011 it had sought to recover $10 billion in losses), and a settlement with a group of 22 mortgage investors. The biggest winners over the last six years are the Wall Street traders and executives who gambled away other peoples’ money, sold the assets short before the 2008 crash, and then repurchased them at fire sale prices and made even more money as the assets came back. The other big winners are the high-priced lawyers who made huge sums advising the Street on how it could get away with its gambling, and then even more sorting out the subsequent mess. An ever-larger portion of the U.S. economy is a giant zero-sum game in which financiers and lawyers make bundles for themselves but produce little or no social benefit. The losers are the small investors (including pension funds) and taxpayers who get stuck with the bill. Where will this end?
Posted on: Wed, 16 Jul 2014 14:05:13 +0000
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