The total scale of the payouts is roughly equivalent to the annual economy of Greece or Portugal.
The fines have affected the banks' efforts to rebuild capital, reduced dividends for investors and cut the amount firms are able to lend.
The misconduct bill, a euphemism used to justify this extortion, is expected to rise by tens of billions more dollars, and many politicians, regulators and industry observers said more needs to be done to deter wrongdoing.
Radical Marxist/Progressive (Democrat) activist groups collected millions from former Attorney General Eric Holder's record $17 billion extortion deal to settle alleged mortgage abuse charges against Bank of America. Buried in the fine print of the deal, which includes $7 billion in soft-dollar consumer relief, were a raft of political payoffs to Obama constituency groups. In effect, the government ordered the nation's largest bank to create a massive slush fund for Marxist/Progressive (Democrat) special interests.
The extortion deal required billions in debt forgiveness payments to delinquent borrowers in Cleveland, Atlanta, Philadelphia, Oakland, Detroit, Chicago and other Marxist/Progressive (Democrat) strongholds — and up to $500 million to cover personal taxes owed on those checks.
Any leftover funds after four years, the settlement stipulates will go to Interest on Lawyers' Trust Account (IOLTA), which provides legal aid for the poor and supports left-wing causes, and NeighborWorks of America, which provides affordable housing and funds a national network of left-wing community organizers operating in the mold of Acorn.
Meanwhile the real culprits go free and even praised by their comrades. Perhaps the guiltiest is Barney Frank. Barney Frank was the principal advocate in Congress for using the government's authority to force lower underwriting standards in the business of housing finance.
Frank’s most successful effort was to impose what were called "affordable housing" requirements on Fannie Mae and Freddie Mac in 1992. Before that time, these two government sponsored enterprises (GSEs) had been required to buy only mortgages that institutional investors would buy--in other words, prime mortgages--but Frank and others thought these standards made it too difficult for low income borrowers to buy homes. The affordable housing law required Fannie and Freddie to meet government quotas when they bought loans from banks and other mortgage originators.
At first, this quota was 30%; that is, of all the loans Freddie and Fannie bought, 30% had to be made to people at or below the median income in their communities. HUD, however, was given authority to administer these quotas, and between 1992 and 2007, the quotas were raised from 30% to 50% under Clinton in 2000 and to 55% under Bush in 2007.
It was inevitable that underwriting standards had to decline. And they did. By 2000, Fannie was offering no-downpayment loans. By 2002, Fannie and Freddie had bought well over $1 trillion of subprime and other low quality loans. Fannie and Freddie were by far the largest part of this effort, but the FHA, Federal Home Loan Banks, Veterans Administration and other agencies--all under congressional and HUD pressure--followed suit. This continued through the 1990s and 2000s until the housing bubble--created by all this government-backed spending--collapsed in 2007.
Marxist/Progressives (Democrats) will never let a great opportunity get away. They blamed the banks for doing what they required, and then Holder began to fine the banks for government required misconduct. These fines were then used to fund more Marxist programs. This is truly a redistribution of wealth as called for by Marx and put into practice by the Marxist/Progressives (Democrats).
Many Americans blame the banks for the housing collapse, while giving the government a clean slate. Many Americans justify the fining of the banks, even though they were adhering to the demands of Marxist/Progressives like Frank and Dodd, who had acquired immense power. It is imperative that the current administration take all possible steps to prevent this type of government intrusion into private industry. Most Americans do not realize that Frank and Dodd were instituting a program called for by Marx; that the government have a monopoly on all lending. The results are predicable.