Bank Settlements Unfair?


It hasn’t been popular in recent years to defend banks. Anyone who tried it was shouted down as being a Wall Street Fat Cat who was in the pocket of Senators and bankers. This was probably unfair, mostly, but not far from the truth.

But now that the financial crisis has cooled slightly and a bit of edge has worn off the old trend is making a comeback. People are beginning to question, for example, the $65 billion in settlements that they 6 top banks made with the US government. This for things like cutting corners with loan documents, over-valuing securities, illegally evicting homeowners without due process, etc.

So why would there be a chorus now of people saying Uncle Sam was too harsh on the banks? They basically feel that the government pushed the banks into making those shady deals in the first place!

Essentially, the government wanted cheap loans to be handed out as fast as possible. Then when the banks complied in less than scrupulous ways the government had a perfect scapegoat for the crash of the economy. Plus the settlements won’t actually address the bigger issues like helping the affected homeowners or preventing the banks from double-dealing again.

So which is it? As in most cases it’s a little of both. I think the best solution is a better educated homeowner and a more informed real estate investor. If you want to join those ranks, let me know and I’ll help you out.

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