From an editorial Monday in the Pittsburgh Post-Gazette:
Last Monday, the Department of Justice announced a $7 billion settlement with Citigroup, the nations third-largest bank, over an investigation into the banks handling of mortgage-backed securities. But dont applaud.
Last year, JPMorgan Chase agreed to pay $13 billion for its role in selling bad mortgage-backed securities though more than half of that penalty was tax-deductible. The Justice Department is also seeking a $20 billion settlement against Bank of America for its role in troubled mortgage investments.
While those settlement numbers are eye-popping, they pale in comparison to the damage wreaked from dumping toxic mortgages on a U.S. economy that has yet to recover from the subprime-accelerated crisis. Despite the large settlement, Citigroup still managed a $181 million net income in the second quarter.
Attorney General Eric Holder hailed the settlement as a landmark civil resolution at a press conference. Yet in his own words, the bank misrepresented the facts, including the level of risk, and sold defective loans to countless investors, including federally financed financial institutions. Misconduct this widespread, systematic and destructive should exact a penalty more severe than five weeks of revenue.
For all the actions at all the banks that were at least criminally negligent if not outright fraudulent in the mortgage-backed securities meltdown, not a single senior banker has gone to jail.
Despite its cheers of historic and landmark penalties, the Justice Department hasnt meted out much justice at all.
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