What’s going to happen next? The banks will be fined, of course. So far, no individual bank employees have been indicted, in part because (to quote the NYT) “the banks long ago dismissed most of the employees suspected of wrongdoing.”
Everyone’s least favorite bank (just me?) has reached a settlement with the Department of Justice, as the Wall Street Journal reports. It is the biggest effing settlement the U.S. has ever made with a single corporation, and is equal to three years of the bank’s profits.
Jon Stewart recently interviewed Consumer Financial Protection Bureau director Richard Cordray on The Daily Show in part to talk about mortgage lending reform (I sent them this letter!), and in part to talk about how hard Cordray’s job is going to be. Godspeed, Richard. [Thanks to Katie for the link!]
JP Morgan just finalized a $13 billion settlement with the Justice Department over investigations into toxic mortgage investments that helped start the financial crisis. Some of that money will be going to help homeowners who took out mortgages with JP Morgan, Bear Stearns and Washington Mutual—the latter two banks being acquired by JP Morgan in 2008. Our pal Heidi Moore has an explainer about where all the money will be going, and why JP Morgan was able to settle without admitting any wrongdoing, over at The Guardian.
Our pal Maria Aspan reports that James Rohr, the executive chairman and former chief executive of PNC, decided to tell the anecdote above during a speech to risk-management executives about “improving banks’ reputations.” Many of the regulatory reforms were put into place after the financial crisis.
I know it’s Monday and it may be too early in the day for you to read 10,000 words about the Securities and Exchange Commission and it’s chair, Mary Jo White, but if you do find some time today, I’d highly recommend reading Nicholas Lemann’s profile of White in the New Yorker.
The U.S. Justice Department is suing Bank of America and accusing it of defrauding investors by masking the risks associated with $850 million in mortgage-backed securities. Essentially, BofA packaged and sold loans to investors through third-party mortgage brokers without telling the investors that some of the loans were defaulting at high rates.
“The banks screwed up the title transfers. A lot. They sold bonds backed by houses they didn’t own. When it came time to foreclose on those homes, they realized that they didn’t actually own them, and so they committed felony after felony, forging the necessary documentation. They stole houses, by the neighborhood-load, and got away with it. The $1B settlement sounded like a big deal, back when the evidence was sealed. Now that Szymoniak’s gotten it into the public eye, it’s clear that $1B was a tiny slap on the wrist: the banks stole trillions of dollars’ worth of houses from you and people like you, paid less than one percent in fines, and got to keep the homes.“