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.