After the U.S. government on Wednesday announced more than $5 billion in combined fines against Bank of America and a handful of other big banks, a reader wrote me to ask who gets all of that money.
It’s an obvious question and one that might be on the minds of other readers. Here’s the answer:
In the case of Bank of America, which is paying $205 million in fines for its foreign-exchange practices, the money is destined for the U.S. Treasury.
According to an order from the Federal Reserve, which fined the bank, the lender is required to immediately transfer the amount via wire to the Federal Reserve Bank of Richmond, which will give it to the Treasury.
When banks are fined by the government, the money doesn’t always go entirely to the Treasury.
For example, a portion of Bank of America’s $16.65 billion settlement (reached last year with the government to resolve claims over soured mortgages and other issues) must go toward consumer relief.
The Wall Street Journal published a breakdown on where the billions in fines announced Wednesday will go. You can find that here.