Talk about “justice is delayed is justice denied.” Four years after the big banksters’ hustles brought the world economy to the brink of a second Great Depression, the feds have filed a civil complaint against Bank of America for selling fraudulent loans to Fannie Mae and Freddie Mac. The suit asks for $1 billion. In the third quarter alone, BofA brought in $2 billion from mortgage banking. It has paid out some $40 billion in repurchases and lawsuits and is still standing.
Why not a criminal investigation into BofA and its mortgage death star Countrywide? This suit is a joke on the American taxpayers and a sign that the Obama administration remains afraid of holding these giant institutions to the rule of law. Michael Mastro must be wishing he were a Too Big to Exist Bank.
This negligence was never mentioned in the presidential debates, and no wonder. Mitt Romney, a private-equity mogul, would deregulate the banks even further. “Both sides do it” is usually lazy thinking and lazy journalism. But with the banks, it’s true. Both parties built the road that the financial “industry” would drive very profitably to the cliff — and throw the American economy off the edge.
Reinstating Glass-Steagall, a wall separating risky investment banking from taxpayer-backed commercial banking, is not enough. Regulation for the 21st century must ensure the safety and soundness of derivatives and the shadow banking sector, among other things. It should penalize high compensation for gambling, making money by moving money around, the riskier the better. It should bring banking back to assembling capital for productive businesses, entrepreneurship and households. Most of all, the big banks must be broken up.
Until then, it’s just a joke. This year alone, the Financial Services Roundtable, an industry group, has spent $4.5 million on lobbying. The people who lost their houses to fraudulent loans never got in the doors at the Capitol.
And Don’t Miss: The dirty secret of debt-hating CEOs — they need big deficits to live || The Atlantic
Today’s Econ Haiku:
Quel dommage, Mastro
If you’d been running WaMu
You’d be a free man