A constant refrain I hear from my fellow bank-bailout opponents is, “Why were no bankers sent to jail?” It is not a question I ask, in part because the foul-ups that led to the Panic of 2008 had a heavy government hand anyway, and in part because anything that did run afoul of the law has usually been handled with civil penalties.
That said, when civil penalties are required, one expects the enforcer (in this case, the federal Department of Justice) to ensure victims are compensated so they can get as close to “being made whole again” as possible. Unfortunately for them, this Justice Department had other ideas (Joel Gehrke – The Corner).
Justice Department officials forced Bank of America and Citigroup to donate to left-wing activist groups as part of a deal to end an investigation into the banks’ policies leading up to the 2008 financial crisis, according to congressional investigators.
So not only did funds that could have been used for restitution go to Administration allies instead, but “as part of a deal to end an investigation” hints – and I stress here, only hints, nothing more – that any bank action that could have led to jail time was ignored in exchange for political payouts.
How important were the political payouts to the Justice crew? They were even more important than compensating victims.
The settlements were hailed as landmark deals that would help people who lost money in the 2008 financial crisis. “One of the benefits of a resolution like this is we can actually begin to compensate public pension funds that were victims,” Associate Attorney General Tony West said when announcing the $16.5 billion settlement with Bank of America.
Yet, the settlement creates an incentive for the banks to donate to activist groups instead of consumers. “Eligible groups include La Raza and NeighborWorks, an organization that has been described as ‘fund(ing) a national network of left-wing community organizers operating in the mold of Acorn,’” according to the Judiciary Committee announcement. “In addition, banks earn two dollars worth of credit against their overall consumer relief commitment for donations above the minimum to activist groups. In contrast, direct forms of consumer relief such as loan modifications earn only dollar-for-dollar credit.”
The matter is now before the House Judiciary Committee – chaired by Virginia’s own Bob Goodlatte. A hearing is set for next week.
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