Bank of Americas $8.5 billion settlement with 22 large investors gives us a clearer picture of how deep the nations mortgage trading problems really are and the picture is of an ever-deepening chasm, meaning that were not finished with learning the vast scope of 2008s problems. So says Charles Ferguson, the director of the must-see film Inside Job, which explains clearly what happened in the years before financial investment irresponsibility nearly tanked the economy.
Ferguson, in an article in New York magazine, notes that these large investors were likely to have reined in their risk-taking in the late stages of the bubble. So if it took $8.5 billion to salve the wounds of BofAs largest investors, then imagine what lies beneath. Multiply that by all the investors who were scammed by the big banks, writes Ferguson, and the potential liabilities are astronomical. (Also featured in New York is a welcome, long piece by former New York Times icon Frank Rich on Pres. Obamas failure to bring the nations financial criminals to justice.)
Ferguson agrees that the Obama administration has been of very little help, particularly to the coalition of states attorneys general who are trying to reach a bank settlement agreement over the countrys massive foreclosure fraud problems. The banks, he writes, are demanding broad amnesty from future prosecutions. With balls like those, you wonder how the hotshot bankers can get out of bed in the morning. As Ferguson reminds us, The justification for babying the banks, if there ever was one, is long gone. Theyre brimming with cash, and its time they did their part to pick up the pieces from the havoc they wreaked.