Uncertainty and rehabilitation
by David Atkins ("thereisnospoon")
While there is much to complain of in recent months from the Obama Administration, there have been some good progressive moves in recent days from the White House. First the Department of Justice blocked the T-Mobile / AT&T merger, at least temporarily. And now federal regulators are suing the big banks over mortgage bundling fraud:
A bruising legal fight pitting the country’s most powerful banks against the full force of the United States government began Friday, as federal regulators filed suits against 17 financial institutions that sold the mortgage giants Fannie Mae and Freddie Mac nearly $200 billion in mortgage-backed securities that later soured.
The suits are the latest legal salvo fired at the banks accusing them of misdeeds during the housing boom. Investors fled financial shares Friday amid growing concern that the litigation could last for years and undermine earnings and balance sheets in the process.
The complaints were filed just as the stock market closed Friday afternoon, but with word leaking out of the impending legal action during the trading session, shares of Bank of America fell more than 8.3 percent, while JPMorgan Chase dropped 4.6 percent and Goldman fell 4.5 percent.
The quote from the designated defender of the banking industry is priceless:
“The suits only add to the uncertainty that dogs the industry,” said Mike Mayo, an analyst with Crédit Agricole. “Banks should pay for what they did wrong, but at the same time they shouldn’t be treated as a big piñata that has the effect of delaying the housing recovery. If banks have to pay for loans they made five years ago, are they going to make new ones?”
On a similar note, it's horrible how we create uncertainty for accused murderers and child molesters by putting them on trial and treating them like some big pinata. How are they ever supposed to walk the path toward rehabilitation and become productive members of society again?
Of course, it's unfair to compare child molesters and murderers to Goldman Sachs. Not even the most prolific serial killers have managed to do as much widespread damage as Goldman Sachs and crew have managed. Also, as individuals theoretically capable of conscience and transformation, murderers have at least the potential for actual rehabilitation, while Goldman Sachs is accountable only to its corporate charter. So it's really not a fair comparison at all.