The $16.65 billion settlement by Bank of America over financial-crisis-era mortgage securities "highlights a pattern of the government extorting the banks," Dick Kovacevich said on CNBC this week. Kovacevich is the former Wells Fargo chairman and CEO. I've known him for years. He ran a great bank. He kept Wells Fargo clean during the credit meltdown. And, unusual for a big-bank CEO, he strongly supports free-market principles.
Kovacevich went on to say, "It's definitely politics. It has nothing to do with justice or restitution to the innocent victims. In fact, more of the money is going to the coffers of the states and various departments than the victims." He then concluded, "Why are we charging the stockholders instead of going after the people who did wrong? Corporations don't engage in criminal behavior. People do."
Kovacevich is right on target. These huge bank settlements are election-year ATMs for the Obama administration. It was $12 billion for JP Morgan, another $7 billion for Citigroup and on and on. It's a real shakedown.
In fact, no one even remotely knows how these penalty-payment numbers are calculated. And the federal government's disbursement of these funds is equally mysterious. As the Wall Street Journal editorial page has pointed out, a lot of money has gone to states run by Democratic governors. Yup.
And in the $7 billion Citibank settlement, there's a section explaining how $2.5 billion goes to "community reinvestment and neighborhood stabilization." What's that mean?
All this sounds suspiciously like the housing version of the ACORN electioneering operations. In other words, community organizers. In other words, left-wing groups who had absolutely nothing to do with the credit crisis. But this shakedown isn't isolated to banks. In spirit, it extends to all businesses. It's the Team Obama way.
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This guy is right on the money, (No pun intended!). All the money for the mortgage fraud, and less than one percent is actually going back to those people who were defrauded. A new oversite committee commissioned by the Feds, yada yada.
In a community close to where I live, there was money granted for "community reinvestment and rehabilitation". The state sued this city and took the money. It disappeared into the state coffers while thousands of people who lost their homes, got nothing. Neighborhoods with empty decaying houses and unkempt yards, devaluing neighborhoods. Then you watch while state employees get raises, and money goes for nonsensical and unnecessary improvements in large cities no where near the small city that suffered. More bureaucracy getting paid, while those who lost get screwed. Yes, It's the Obama way.