How Much Have The Big Banks Been Penalized Over Mortgage Mess And Where Is All That Cash Going?

The last few years have seen numerous settlements between the nation’s biggest mortgage lenders and various federal and state authorities. And while we hear numbers like “a total of $25 billion,” exactly which banks are responsible for the biggest chunks of these settlements?

The folks at ProPublica have put together this handy/dandy chart that breaks down what the country’s largest banks have been docked by the Justice Dept. and the SEC in recent years.

Not surprisingly, Bank of America leads the dollar tally, with more than $12 billion in penalties, $87.5 million of which is directly attributed to Countrywide.

Almost the entire amount now owed by BofA is related to the recent settlement between the big banks, the Attorneys General of 49 states and the DOJ. Of that $11.82 billion, the bank will pay $3.24 billion in penalties to federal and state governments, while $8.58 billion goes to homeowner relief programs.

Also hit by that massive settlement were Ally (nee GMAC), which will pay $110 million in penalties and $200 million to relief programs; Citigroup, on the hook for $415 million in penalties and $1.79 for relief; JPMorgan Chase will hand over $1.08 in penalties and $4.21 billion for relief; and Wells Fargo has a $1.01 billion tab for penalties and another $3.34 going to relief programs.

At the low end of the spectrum is the $1,000,000 settlement between the SEC and Bear Stearns over bad mortgage-backed investments. If you think that number is small, so does the judge in the case; he called it “chump change.” Regardless, all of that cash will be going to the Treasury as a penalty.

Ponying Up: How Much Have Big Banks Been Docked for the Financial Crisis? [ProPublica]


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  1. humphrmi says:

    Ironically Bear Stearns started the whole mess, when they announced (in 2007, I think) that two of their mortgage-backed funds had been downgraded but that they were going to backstop them. That started a run on Bear, the whole Cramer Bear Stearns fiasco, and eventually their failure. Shortly after that, more banks started announcing similar downgrades & losses climaxing with the failure of Lehman Brothers. Ahh, the memories.

  2. dolemite says:

    My favorite penalties are banned from serving as an officer of a company for a few years, or banned from security trading for a few years. So…no jail time for anyone, despite widespread fraud and illegal activities.

    • BobOki says:

      And you are surprised? Laws were made for the masses… the pleebs.. not the big rollers and bankers.

  3. RandomMutterings says:

    The chart is meaningless unless one can compare the fines assessed against the ‘profits’ made by the banksters in each case. I am quite confident the fines are a tiny portion of the monies made, and are seen as a simple ‘cost of doing business’ by the banks. What is needed is criminal prosecution, but that simply isn’t going to happen. After all, if corporations are people, can’t they be jailed?

    • TuxthePenguin says:

      God, I am sick of a misunderstanding of Citizens United. Corporations are “people” in that they have many of the rights of real people. The big craziness that seems to bother people is that they can now freely act in the political sphere. But that only makes since – if I can use my freedom of speech and you can use your freedom of speech, and we invoke another freedom (assembly) to create a corporation, why then can that corporation now use our joint freedom of speech? Yes, as it gets larger there will be disagreements, but that’s normal – unions have routinely supported Democrats over the objections of their members.

      It also removes a quite nasty double standard – unions could contribute, but their opponents at the bargaining table could not.

      But lets say we get rid of that – are you okay with banning all political activity by non-human entities? No non-profits, PACs, unions, corporations, etc. Even papers would need to get rid of their editorial sections – they are all non-humans. Why should they get special rights? Because they are “the press”? Well, we’ve already said that freedom of speech is a human-only right and “the press” is actually the people involved in the process – why should they get a larger platform because they create a newspaper? Couldn’t any corporation that has a “newspaper” then qualify?

      Its just easier to let anyone contribute that wants. But make it completely transparent – any organization that participates must fully disclose all sources of revenue – no anonymous donors. Sunshine is the best thing for the process – anything else just means money becomes more valuable… and means that the individual wealthy man running has an advantage over everyone else… you can’t stop someone from spending their own cash on their campaign.

      • dolemite says:

        The problem lies in assuming a corporation is made up entirely of people that support its “speech” and intentions. It’s entirely possible to work for a meat slaughtering plant and be a vegan. Or work for a Christian organization and be an atheist, or work for the DNC and vote republican.

      • ShreeThunderbird says:

        Perhaps this comment ‚Äì “But that only makes since” ‚Äìwould have made more SENSE had the correct word been used. Spell check is no substitute for grammar.

    • Buckus says:

      I’m certain the “Fines” would have to have an arrow pointing out where they are in the pie chart, since the slice would not be visible with the naked eye.

  4. Tiercelet says:

    Indeed. Now let’s counterbalance those fees against the amount of free money the banks have been given in direct bailouts, artificially low federal funds rates, and regulatory forbearance.

    Oh and don’t forget that most of BofA’s penalty is payable in other people’s money — in the form of the bank getting credit for modifying the mortgages which have already been sold to pension funds, which BofA is merely servicing, not owning. While keeping its own second liens at full value, in flagrant disregard for the usual rules of debt seniority.

  5. jjups says:

    So basically, we are sending them a bill for the amount of bailout money we gave them give or take a few billion. Sounds like a real penalty. Right!