Bank of America is the latest to pay a fine for mortgage fraud that led to the financial crises that resulted in thousands of people losing their homes. In announcing the fine that had been agreed to of $16.65 billion, Attorney General Eric Holder said today:
“Bank of America has acknowledged that, in the years leading up to the financial crisis that devastated our economy in 2008, it, Merrill Lynch, and Countrywide sold billions of dollars of RMBS (residential mortgage-backed securities) backed by toxic loans whose quality, and level of risk, they knowingly misrepresented to investors and the U.S. government,” added Holder. “These loans contained material underwriting defects; they were secured by properties with inflated appraisals; they failed to comply with federal, state, and local laws; and they were insufficiently collateralized. Yet these financial institutions knowingly, routinely, falsely, and fraudulently marked and sold these loans as sound and reliable investments.” [My emphasis-MS]
But Holder did not say who exactly knowingly did the lying, acting as if it was some kind of disembodied entity. As yet not a single senior bank executive has gone to jail or even been threatened with it. If you or I had lied to the government on even a small scale, we would be prosecuted as individuals but in the system in which we now live, some people are just too important to jail. The news report did not say if the bank had even admitted wrongdoing.
Furthermore, some of the fine will be tax deductible. The bank’s stock price rose by 4% on the announcement of the fine.
Ha! Reminds me of a very, very old snark:
Which is the worse crime? Robbing a bank? Or owning one?
@Chiroptera -- nowadays you can both own the bank and rob from it, by long-selling your own shares and then doing something like agreeing to pay a fine and covering your spread.
Fines are just the cost of doing business if the net result is profit.
(Capitalism at its finest!)
The problem with corporations, and banks is that, as Lincoln pointed out, that corporation have neither soul to damn nor body to punish.
I propose a corporate jail sentence.
It would work like this: Upon conviction the corporation would have all its assets, including real estate, stocks and bonds controlled or owned by the corporation would be frozen in place. You can’t buy, sell, trade, or use them as collateral in any offering or negotiation. There will also be no dividend or buy-backs. This would stay this way for the number of years specified.
Notice that this is technically not a “taking” or tax, or forfeiture. Everything just stops and remains that way for the time specified.
@lorn(#4):
Wouldn’t work. Aside from being effectively a death sentence for the corporation in question you would also harm everyone done business with this corporation.
The better solution would be to jail the C*O level people as a proxy.