The Justice Department is touting its record $16.65 billion settlement with Bank of America, officially announced this morning, in connection with the bank’s sale of mortgage-backed securities prior to the crash of 2008. I’m sorry but I’m not impressed. Here’s why: (1) More than $10 billion of this will be deductible by the bank from its taxable income. (2) Several billion is in the form of reduced mortgage loans on which the bank took losses years ago, so won’t take a financial hit now. (3) The net penalty pales in comparison to what the bank rakes in. Its pretax income in 2013 alone was $16.1 billion. Proof the settlement doesn’t hurt: the bank’s shares were up 4 percent yesterday, after news of the settlement was released, and continue to climb today. (4) As with the other big bank settlements, none of its top executives will be indicted or go to jail. Big numbers in the fines paid by Wall Street banks are no substitute for accountability, and the bankers are no more accountable than they were before 2008. -- Robert Reich
Posted on: Fri, 22 Aug 2014 22:44:21 +0000