Former Wells Fargo CEO: Govt Fine of BofA 'Has Nothing to Do With Justice'

Thursday, 21 Aug 2014 01:04 PM

By Dan Weil

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The $17 billion settlement reached between the government and Bank of America for the bank's handling of mortgage securities in the run-up to the 2008 financial crisis doesn't represent justice, says former Wells Fargo CEO Dick Kovacevich.

"It's definitely politics," he told CNBC. "It has nothing to do with justice or restitution to the innocent victims. In fact, more of the money is going to the coffers of the states and various departments than the victims."

Some financial commentators have pointed out that the government's crusade against major banks only hurts their shareholders and employees rather than bank executives who perpetrated wrongdoing.

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Kovacevich apparently agrees.

"Why are we charging the stock holders instead of going after the people who did wrong?" he asked. "Corporations don't engage in criminal behavior. They don't take advantage of innocent people. People do."

So why is the government chasing down banks instead of their executives?

"They are going after corporations because they can," Kovacevich said. "They aren't going after the individual because it takes a long time to do so."

To be sure, prosecutors reportedly are forming a civil lawsuit against Angelo Mozilo, co-founder of Countrywide.

Mark Williams, a former bank examiner who teaches finance at Boston University, shares Kovacevich's concern.

"The banks extracted billions from unassuming customers, and now Justice has extracted billions of dollars in settlements to make up for that," he told The Washington Post.

"But corporate executives should not be able to hide behind their companies and have shareholders pay for egregious behavior."

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