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May 25, 2016

WSJ on the ‘Bank Fraud that Wasn’t’

The Wall Street Journal editorial board opines on yesterday’s Second Circuit Court of Appeals ruling that “overturned a $1.27 billion penalty against Bank of America and tossed out a $1 million penalty against” a former Countrywide Financial executive. 

“In a novel interpretation developed after the financial crisis, prosecutors decided that if they couldn’t find a bank to serve as the victim, they could consider the banks to be victimizing themselves,” notes the editorial. “The lawyers call it a ‘self-affecting’ fraud. In this case since there wasn’t any fraud we won’t have the chance to learn whether it’s an actual offense or merely a case of prosecutors self-affecting themselves.”

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