The U.S. government is suing Bank of America for $1 billion dollars, accusing it of selling bad mortgages to Fannie Mae and Freddie Mac, which are owned by the government and suffered massive losses during the financial crisis.
It is not the first time federal prosecutors are targeting big banks: a couple of weeks ago, Wells Fargo was sued for allegedly handing out reckless mortgages.
But is the government really right to shift all the blame onto Bank of America? Shouldn’t Fannie and Freddie have done their own due diligence?
Marketplace notes that it’s not as if CountryWide, which sold the mortgages and was later bought by Bank of America, ever did any false advertising.
In one TV commercial, a spokeswoman boasted about finding loans for "a growing family with a lot of debt, a young couple with no down payment [and] a business owner whose income was hard to document. I'm with Countrywide, and I got them all approved."
As one New York Times reader commented, “[Bank of America] wasn’t breaking the law. It's up to policy makers. If it's legal to steal candy from candy stores, once the candy store goes out of business because there's no Candy left, who do you blame? They need to be regulated. Not punished.”
Indeed, it seems a bit late to be suing Bank of America or other financial institutions. Instead of pointing their finger at banks, government agencies should make sure they have firm regulation in place and strong oversight to prevent another crisis from breaking out in the first place on the heels of someone selling shady financial products.