Yesterday the biggest settlement of the ongoing financial crisis was hammered out between bankers and loan buyers such as Fannie Mae. The civil settlements, to the tune of $19 billion forthcoming from the bankers, may signal the coming of the end for Federal regulatory probes.
One case involving some 10 banks was settled with regulators for the some of $8.5 billion. A second case, one involving Bank of America Corp. was cured with an agreement by the former leader in home mortgages, for $10.4 billion to be paid out to Fannie Mae (Timothy J. Mayopoulos, CEO below left). That giant loan buyer, for those not in the know, was later seized and supported by untold billions in taxpayer money.
The gist of these cases really boil down to Federal prosecutors laying off the criminal investigations, and focusing (or dealing) on the civil ones. While some are ecstatic that banks have accepted responsibility, others condemn the settlements as “too lenient” where Bank of America and others being held accountable goes. The trillions in losses suffered, some say, are not nearly rectified by these settlements. Paying back losses suffered by Fannie Mae, and buying back bad “paper”, even still Bank of America will turn a profit for 2012 according to NBC News.
While the Wall Street Journal and others sew the seeds of renewed loan approvals on the heels of these decisions, it’s going to be some time (if ever) for Wall Street itself to live down the uncertainty the collapse of 2008 caused. Calling irresponsible investing practice “alleged mortgage misdeeds”, and taking a veritable handout in the billions in settlements, the logic simply has to escape most of middle America.
It should be noted too, that in the last three years Bank of America has reached settlements to the tune of some $43.52 billion dollars for one case or another. This New York Times article reveals to an extent, the depth and breadth of the real estate bubble bursting, at least where Bank of America and their dealings with now notorious Countrywide Financial Corporation is concerned. A final note here, while trillions of dollars of investor and taxpayer funds seem to have evaporated, no one at Countrywide Financial, Bank of America, or any of the other principal players in these Federal investigations has admitted any wrongdoing.