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Reported Bank of America Mortgage Fraud Settlement Highlights Need for Transparency

Aug. 21, 2014

Reported Bank of America Mortgage Fraud Settlement Highlights Need for Transparency

Statements by Lisa Gilbert, Bartlett Naylor and Robert Weissman, Public Citizen

Note: Bank of America has agreed to pay a $9 billion fine as part of a $16.6 billion settlement with the U.S. Department of Justice over the fraudulent sale of mortgages. Below are comments from Public Citizen experts.

“Public Citizen welcomes the moderately more aggressive posture on the part of the U.S. Department of Justice, which very belatedly has decided to impose fines on the Big Banks that crashed our economy. But we remain concerned that the Bank of America settlement penalties are designed to be easily absorbed by the giant bank and leaves key questions unanswered. Bank of America sold nearly $1 trillion worth of mortgages and more than $200 billion were defective. It is important for Main Street to understand if the Department of Justice tailored their settlement to avoid jeopardizing the bank’s stability.”

“The statement of fact failed to identify the amount of profit the bank gained, or show how the penalty will restore losses to investor victims. Nor did it identify individuals responsible for the fraud. Short of this, the settlement will do little to help Americans believe that equal justice prevails at mega-banks.”

– Lisa Gilbert, director, Public Citizen’s Congress Watch division

“This settlement thickens the list of private deals between government litigators and the largest financial institutions. As Public Citizen’s recent report demonstrates, the Department of Justice has largely shied away from aggressively prosecuting Wall Street banks and opted instead for fines and settlements. Fair justice calls for transparent use of the courts where the public can understand the evidence and the adequacy of remedies. Bank of America managers are at the center of the mortgage fraud, but the Justice Department penalty will essentially fall on shareholders who certainly were not conspirators. The corrupt culture of Wall Street won’t be reformed until perpetrators are held accountable.”

– Bartlett Naylor, financial policy advocate, Public Citizen’s Congress Watch division

“The public wants to know will anyone go to jail for crashing the economy? Will any executives or Wall Street goliaths be held criminally liable for their misdeeds? Sadly, shamefully, it appears the answer to these questions is no.”

– Robert Weissman, president, Public Citizen