As part of a continuing series, let’s look at the latest round of settlement for malfeasance by the Wall Street Banks running up to the financial crisis.
In the latest Wall Street investment bank settlement, announced this morning via Reuters, Morgan Stanley agreed to pay $2.6 billion to resolve potential claims stemming from the sale of mortgage bonds before the crisis.
Read about the settlement here.
This comes just one day after Met Life Home Loans (which was one of the largest mortgage bankers prior to the crisis) agreed to pay $123.5 million to resolve allegations that it knowingly approved loans to unqualified buyers which were destined to be sold to Fannie Mae and Freddie Mac.
Read about this settlement here.
There are several interesting things about all this. While many of the settlements seem huge, none of them had any significant impact on the profitability or stock price of the companies in question. And while most of the accusations involved potentially criminal activity, no executive of any Wall Street bank has yet been prosecuted for their roles in creating the mortgage crisis.
Last week Attorney General Eric Holder announced he had given federal prosecutors 90 days to decide whether they can bring cases against individuals for their roles in the crisis. Are the Wall Street investment bank settlements nothing more than a way to dodge criminal indictments?
If you believe that Wall Street investment banks acted poorly, it is hard to imagine that the federal prosecutors have done all they can to hold those responsible accountable. But at this late date, it doesn’t appear likely. The window on prosecution is closing, and Congress is now working hard to soften or even negate the regulations placed on banks by the Consumer Financial Protection Bureau (CFPB.) How quickly we forget…