“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx
Sep 1, 2014
The biggest U.S. banks continue to pay record fines to settle suits brought against them for their role in the subprime mortgage crisis. Following JPMorgan Chase’s payment of 13 billion dollars in 2013 and Citigroup’s agreement to pay 7 billion last July, it is now Bank of America’s turn, with a total fine of 17 billion.
These impressive penalties allow the politicians to appear to be fighting against the banks’ “abuses” and to be taking firm action to clean up capitalism’s dirty excesses. They also allow these banks to reestablish their image, which has become somewhat tarnished since the crisis. However, these fines are not as heavy as they would seem at first sight.
Despite the total of 50 billion that the four biggest U.S. banks were forced to pay in 2013, they nevertheless made another 65 billion in profits that year.
These penalties are insignificant when compared with what the U.S. government put on the table to bail out the banking sector after the crisis in 2008. And even today, the government is going to help the big banks to pay their fines! They will be able to deduct part of the total settlement from their taxable incomes!
Out of the 17 billion that Bank of America owes, it will pay only 9.65 billion to the government. The remaining 7 billion is supposed to go toward lessening the monthly payments of indebted households, which nevertheless continue to be drained by the banks. In fact, this is an indirect aid for the banks, since it allows their debtors to be able to keep paying them.
Although the politicians and government officials are trying to fool the public with these “sanctions,” Wall Street understands very well what is going on – Bank of America stock rose by more than 4% on the day this settlement was decided. As for those whose lives were shattered by the loans they could not pay, for the millions who lost their mortgaged homes, there is no compensation in sight.