Save Money in this Sunday's paper

U.S. Opinions: Pittsburgh

comments

Cheap justice for banks

From an editorial Monday in the Pittsburgh Post-Gazette:

Last Monday, the Department of Justice announced a $7 billion settlement with Citigroup, the nation’s third-largest bank, over an investigation into the bank’s handling of mortgage-backed securities. But don’t 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 hasn’t meted out much justice at all.

Hide Comments

This affects comments on all stories.

Cancel OK

The Charlotte Observer welcomes your comments on news of the day. The more voices engaged in conversation, the better for us all, but do keep it civil. Please refrain from profanity, obscenity, spam, name-calling or attacking others for their views.

Have a news tip? You can send it to a local news editor; email local@charlotteobserver.com to send us your tip - or - consider joining the Public Insight Network and become a source for The Charlotte Observer.

  Read more



Hide Comments

This affects comments on all stories.

Cancel OK

The Charlotte Observer welcomes your comments on news of the day. The more voices engaged in conversation, the better for us all, but do keep it civil. Please refrain from profanity, obscenity, spam, name-calling or attacking others for their views.

Have a news tip? You can send it to a local news editor; email local@charlotteobserver.com to send us your tip - or - consider joining the Public Insight Network and become a source for The Charlotte Observer.

  Read more


Quick Job Search
Salary Databases
Your 2 Cents
Share your opinion with our Partners
Learn More
CharlotteObserver.com