Bank of America deal leaves some unpunished

In the largest civil settlement between a firm and the government, Bank of America agreed to pay $16.7 billion for its role in the financial crisis.

I’m not a corporation basher, but something seems wrong here. No one is brought to trial or goes to jail? In the end, who will actually pay this fine? Hint: Not the people at the top.

Aaron Bowen

Where is my justice? What about all those borrowers who didn’t pay their notes? You know the ones who are really responsible for the housing crash.

If people had borrowed responsibly, we wouldn’t have had to bail them out. They borrowed the money; they promised to pay; they didn’t. But it’s true that the guys lending the money and giving people a chance to own property are also to blame.

Rob Roy McGregor

People respond to incentives. This includes lenders and borrowers. If borrowers are encouraged to lend because they bear little risk, then they will do just that. If borrowers are encouraged to borrow because housing prices continue to climb, then they will do just that.

This was a classic creditbased, boom-and-bust cycle induced by the transfer of risk coupled with destructive monetary policy. It was always unsustainable.

Worrying about whether it was the borrowers’ fault for not anticipating a loss of income when the bust happened, or whether it was the lenders’ fault for not anticipating the borrowers’ loss of income when the bust happened, is a fruitless diagnosis of the symptoms, not the cause.

The result was inevitable because of the risk allowed.

David Fairchild