MANY people became rightfully upset about bailouts given to big banks during the mortgage crisis. But it turns out that they are still going on, if more quietly, through the back door.
The existence of one such secret deal, struck in July between the Federal Reserve Bank of New York and Bank of America, came to light just last week in court filings.
Still, last week’s details of the undisclosed settlement between the New York Fed and Bank of America are remarkable. Not only do the filings show the New York Fed helping to thwart another institution’s fraud case against the bank, they also reveal that the New York Fed agreed to give away what may be billions of dollars in potential legal claims.
And how much political hay have your seen about this, or disclosure for that matter? Zero, right?
When did this happen? Last July.
When was it disclosed? Last Wednesday.
Who authorized what looks like a $7 billion gift to Bank of America? Who knows.
Here’s the real scandal in all this: It appears that The Fed effectively released Bank of America from these claims for zero in compensation — that is, they got nothing in return for it.
The problem with these sorts of deals isn’t necessarily that they happen at all. It’s that they happen with zero disclosure up front and debate, and then are presented as an “accomplished fact” later on and the people who get reamed by it have no recourse.
Just as with our “Just US” system has allowed financial institutions to commit myriad and sundry felonies for as little as $35 each and sometimes less, we have civil claims being released without any compensation at all — claims that do belong to someone, and funds that (if the conduct is proved) are owed to someone.
It is very difficult to argue that the citizens of the nation should obey the law when those who are wealthy, powerful and well-connected can simply ignore that very same law, knowing they can pay a trivial fine — or none at all – when they get caught.