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August 22, 2014

WSJ: Banking ‘In a Time of Cholera’

The Wall Street Journal editorial board takes another swing at the U.S. Department of Justice’s extraction of the $16.65 billion settlement from Bank of America (view the initial editorial here.)

In today’s editorial, the WSJ calls the settlement “arbitrary,” “invented” and a “punishment” for having purchased Countrywide and Merrill Lunch during the financial crisis (an action the WSJ refers to as “doing the feds a favor.”)

After all, notes the editorial, the 30-page “statement of facts” issued by the U.S. Justice Department contains only a “page and a quarter” regarding mortgage securities issues by Bank of America prior to its acquisition of Countrywide and Merrill. The other 28-plus pages concerned Countrywide and Merrill Lynch.

“The irony is that during the crisis the feds were delighted that a bank with reservoirs of private capital was willing to rescue the two firms from bankruptcy,” notes the editorial. “For that public service, BofA will now be relieved of about nine months of its net income.”

In this “post-Dodd-Frank world”, concludes the editorial, “no CEO can afford to disagree publicly with the government, much less resist a settlement.”

Read the full editorial here.

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