Article below: However, again I ask - where is the money from all the penalties going:
16.65 Billion from Bank of America (9.65 Billion penalty - and 7 Billion relief to borrowers)
13.00 Billion from JP Morgan (4 Billion relief to consumers)
7.00 Billion from Citigroup (2.5 Billion in consumer relief)
So that's a total of 13.5 Billion in consumer relief and 16.15 Billion to gov't. I'd love to see an accounting of where that went.
The Justice Department has announced a $16.65 billion settlement with Bank of America over its role in the sale of mortgage-backed securities in the runup to the financial crisis.
The deal announced on Thursday calls for the bank, the second largest in the United States, to pay a $9.65 billion cash penalty, and provide about $7 billion of relief to struggling borrowers.
The settlement is by far the largest deal the Justice Department has reached with a bank over the 2008 mortgage meltdown. In the last year, JPMorgan Chase & Co. agreed to a $13 billion settlement while Citigroup reached a separate $7 billion deal.
The settlement is about the same as the bank’s total profit from the past three years.
The settlement resolves one of at least two dozen additional investigations by prosecutors nationwide, according to the New York Times.
The deal requires Bank of America to acknowledge making serious misrepresentations about the quality of its residential mortgage-backed securities issued by itself and by Countrywide Financial and Merrill Lynch. Those institutions were acquired by the bank when they were on the brink of failure in 2008 and they were responsible for the bulk of the questionable loans.
The deals are intended to offer some financial relief to homeowners, whose mortgages were bundled into securities by the banks in question and then sold to investors.
The securities contained residential mortgages from borrowers who were unlikely to be able to repay their loans. Still, the securities were promoted as relatively safe investments until the housing market collapsed and investors suffered billions of dollars in losses.
The poor quality of the loans led to huge losses for investors and a slew of foreclosures, kicking off the recession that began in late 2007. The cash totals now being paid by some of the country's largest banks are not nearly enough to reverse the damages caused by the bursting of the housing bubble and the ensuing recession.
For the Justice Department, which has been criticized for what has appeared to be a less than hard-charging response to the financial meltdown, which was the worst since the 1930s. The recession saw economies teetering, housing prices plummet and millions lose their jobs in the worldwide fallout.
For Wall Street, it is less a defeat than yet another warning that the piper will probably have to be paid. Citigroup and JPMorgan Chase have settled similar cases, and reports say Goldman Sachs and Wells Fargo are due for government scrutiny.
In July, Citigroup agreed to pay $7 billion to settle a U.S. government investigation into securities backed by risky subprime mortgages. In that settlement, Citigroup agreed to make a $4 billion civil monetary payment to the Justice Department, give an additional $500 million in compensatory payments to the state's attorney general and the Federal Deposit Insurance Corporation, and provide $2.5 billion in consumer relief, which was specified to include financing for construction and preservation of affordable housing as well as principal reduction and forbearance for residential loans.
In November, JPMorgan Chase agreed to pay a $13 billion settlement over mislabeled mortgage securities that federal and state authorities said stoked the financial crisis. The deal included $9 billion in payments to authorities and $4 billion in relief to consumers – mainly homeowners – harmed by the conduct of JPMorgan and the two failed banks it took over during the crisis, Bear Stearns and Washington Mutual.
http://america.aljazeera.com/article...ettlement.html
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Originally posted by jimmer
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