More than eight years after the market crash of 2007-08, no bank or mortgage company executive has faced criminal charges for fraudulent activities that resulted in millions of foreclosures and the Great Recession. Just as no General Motors executive will see the inside of a jail cell for the deaths of hundreds of car-owners who were the anticipated victims of faulty ignition switches, bank executives were able to breathe easy when the government finally got around to slapping wrists. Last week it was Goldman Sachs’s turn for a trip to the woodshed, and it seems as if the regulators played favorites.
As reported in marketwatch.com, Goldman Sachs has agreed to pay $1.8 billion in “consumer relief,” according to their press release, “in the form of principal relief for underwater homeowners and distressed borrowers; financing for construction, rehabilitation and preservation of affordable housing, and support for debt restructuring, foreclosure prevention and housing quality improvement programs, as well as land banks.”
As a dollar amount, $1.8 billion strikes the working-class eye as immense, but consider that Bank of America was forced to pay almost $10 billion, and JP Morgan $4 billion. Despite the disparities among the penalties, which given the benefit of the doubt could be explained by facts in the case as easily as by politics, all such fines bear scrutiny. Lisa Donner, executive director of Americans for Financial Reform, said, “The big numbers in the settlements make headlines and can sound good, but when you look at the details, and at what’s really happened, they often don’t translate into relief for hard-hit borrowers and communities at that the level that those big numbers would lead you to expect.”
Part of “what’s really happened” is that banks count toward their settlements activities that they would already undertake rather than only counting new initiatives. Banks also engage in “double counting,” for example claiming credit for providing new mortgages to under-served borrowers but at the same time claiming such mortgages toward obligations set forth by the Community Reinvestment Act. Why, it’s almost as if the banks are reluctant to take responsibility for the havoc they wreaked in the lives of millions of people.
There will be those who hear that a multinational investment bank must pay a sum with the word “billion” in it and will feel a tug at their heart strings. Poor bank. Such people, who identify with power and authority though they have little of either, and who accept the fiction that a corporation is a person, are capable of sentimental feelings for commercial entities and so, like someone who is afraid to go outside because Voldemort might be out there, are beyond reach at the moment.
But then there are those, the majority I suspect, who look at the doings of Goldman Sachs and the corporate lawyers in charge of regulating them, and shake their heads in disgust while they shrug their shoulders. “It is what it is,” we can hear them say. As if to say, “It is what it is, and what is must be.”
But it does not have to be. Huge investment banks, housing bubbles inflated with the hot air of fraudulent mortgage deals, and criminal bail-outs that take place under our noses and against our will—these things are not necessary or natural. They do not have to be. They are simply the acts of powerful people.
They have more money than we do, in fact about sixty of them have more money than about three billion of us. But there’s that word billion again. It is our billions against their billions, and I’m betting on ours. It will not be easy, and we will have to come together in ways outside the permitted channels of political activity—namely voting for presidents and Congresspeople. Those avenues are well controlled (Bernie Sanders is not going to solve our problems). With the creativity and energy of ordinary people, however, anything is, if not easy, at least possible.
It starts with us. Let’s agree that tomorrow we will all talk to a stranger. Bring up Goldman Sachs. Bring up the GM ignition switch recall. Bring up the Flint water crisis. You will soon find you are not alone in your indignation. And maybe one day this year we will begin to hear people say, not “It is what it is” but “It is, but not for long!”
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