A U.S. District judge in Los Angeles announced terms of a settlement of a class-action lawsuit involving Countrywide Financial Corporation. The LA Times reported the story over this past weekend.The terms require Bank of America, Countrywide's current owner, to pay $600 million to former Countrywide shareholders remaining in the case. KPMG, which provided the accounting fig leaf for Countrywide's bamboozling, has to pony up $24 million.
A number of plaintiffs won't settle, feeling they would be getting pennies on the dollar. The Oregon attorney general's office, for example, noted its clients would receive a grand total of $500,000 in the settlement; they were owed $14 million.
On the face of it, Bank of America (BOA) must love this settlement. The institution walks away from Countrywide's massive fraud with a manageable, one-time balance sheet hit. Keep in mind BOA received TARP funds, and no indictments of bank personnel for illegal activity have ever been issued. Countrywide's former boss Angelo Mozillo remains unindicted, and with plenty of money he collected as a direct result of his firm's fleecing of home buyers and mortgage investors.
The transfer of wealth from low-income home owners to institutional investors and high net-worth individuals has frayed our nation's social fabric. Our country's societal structure now resembles a barbell, with wealth extremes held together by a slender middle class rod. Do you think that's a desirable state of affairs? All opinions welcome, within reason.
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