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Big banks settling -8/22/2014, 10:16 AM

Tuition pays for this -8/22/2014, 10:16 AM

College textbook scam -8/22/2014, 10:16 AM

Policing a riot -8/21/2014, 9:45 AM

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GOP split -7/17/2014, 8:38 AM

New Kansas senator -7/17/2014, 8:37 AM

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SPOTLIGHT

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Big banks settling

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On Thursday, the U.S. Justice Department announced the largest-ever civil settlement with a single entity when Bank of America agreed to pay $16.65 billion.

The settlement was in response to multiple lawsuits filed in the wake of the country's mortgage crisis that led to the Great Recession. Bank of America, plus its subsidiaries Country Financial Corp. and Merrill Lynch, are paying the price for their roles in selling risky and mostly worthless mortgage-backed securities, and for their loan practices.

"Bank of America profited by misleading investors about the risky nature of the mortgage-backed securities it sold," California Attorney General Kamala Harris said in a statement.

U.S. Attorney General Eric Holder said "when confronted with concerns about their reckless practices -- bankers at these institutions continued to mislead investors" and approve "loans with fundamental credit, compliance and legal defects."

While the settlement is the largest, it isn't the only punishment being meted out to financial institutions that helped cause the nation's worst economic times since the Great Depression of the 1930s.

BoA already had been fined $1.3 billion because of Countrywide's fraudulent mortgage program internally known as "the hustle." Bank of America also has agreed to pay $5.8 billion for the toxic mortgage securities it, Countrywide and Merrill Lynch sold to the government-sponsored Fannie Mae and Freddie Mac programs.

Last month, Citigroup settled for $7 billion because its agents sold defective mortgage investments during the subprime housing boom as well. Last year, JPMorgan Chase & Co. agreed to a $13 billion settlement to resolve a similar dispute.

On its face, all of the settlements sound great. There has been a diligent effort made by state and federal officials to hold accountable all the companies whose lustful pursuit of profits and bonuses resulted in severe damage to not only the U.S. economy but most global markets as well. Household wealth in this country alone fell by approximately $16.4 trillion when the artificially inflated housing market crashed and stock prices plummeted.

That number bears repeating. Americans lost $16.4 trillion in net worth between the spring of 2007 and early 2009. The less than $50 billion in settlements does not even pretend to make up for the losses incurred by ordinary citizens who fell victim to somebody else's greed. Not even close. The settlements don't even address the number of home foreclosures, bankruptcies, devastated retirement plans and lost jobs as the national economy ground to a halt.

Economists and financial planners will tell you net worth has been regained -- and then some. The Wall Street Journal reported earlier in March that by the end of 2013, that net worth was hitting record highs in excess of $80 trillion. Home values are rising modestly, but the primary driver has been record-high stock prices.

We must emphasize who owns stocks. No less than 80 percent of the entire market is claimed by the wealthiest 10 percent of Americans. Which implies the only people who have recovered from the recession are the rich. Your average U.S. citizen has recouped less than 50 percent of their losses from the recession. That, in turn, further increases the wealth disparity that already had been causing unrest in America.

So when state and federal governments continue to pander to the interests of "job-creators" and wealthy concerns, we hope regular people pay attention. Most of the policies and programs intended to improve the economy center on the class that already has recovered its money and more. The vast majority of us still struggle to regain our meager footholds, yet elect politicians resolved to further widen the wealth and income gaps.

Justice is not being served by the settlements agreed to by the offending financial institutions. Their collective behavior was criminal, yet nobody is going to jail. The corporate "persons" simultaneously are being given even more freedom to exploit the working class.

Unfortunately, we have nobody to blame but ourselves.

Editorial by Patrick Lowry

plowry@dailynews.net

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