Paul Sassone: Government has interesting perception of ‘justice’ for banks

Are “economics” and “business” synonyms?

Or are they different?

Either way, I don’t understand.

Take this for example: the recent government settlement with Citigroup.

Citigroup agreed to cough up $7 billion for bad mortgages the government said helped set off the Great Recession.

So, here’s the first thing I don’t understand: Though individual borrowers and homeowners are the victims, here’s how the $7 billion is to be divided — $4 billion to the federal government in penalties, $500 million to five states (including Illinois) and Federal Deposit Insurance and $2.5 billion for homeowner relief.

Why do the victims receive such a small slice of the pie? I don’t understand.

Also, I don’t understand how a fine is punishment for a bank. Punishment should consist of the loss of something that will really hurt the offender, such as his liberty.

But Citigroup isn’t going to be hurt much by giving up $7 billion.

That $7 billion represents one quarter’s earnings. And Citigroup reportedly last year earned $14 bullion and had $35 billion cash on hand.

So, a $7 billion fine is as much a hardship for the bank as, say, me taking 100 Snickers candy bars (my favorite). And when caught, getting fined 20 Snickers. Why should I care? I still have 80 Snickers.

When announcing this settlement, U.S. Attorney General Eric Holder said the settlement doesn’t preclude the possibility of criminal charges being filed.

Oh?

The Citigroup fine is just the latest for bad mortgages involving gigantic banks, such as JP Morgan and Bank of America.

To date, no criminal charges have been filed.

I don’t understand.

But maybe it’s not economics and business I don’t understand.

Perhaps what I don’t understand is the American system of justice.

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