David Dayen
1. Hey remember when DoJ blustered that Deutsche Bank was going to pay 14 BILLION DOLLARS for mortgage bond abuses & everyone freaked out?
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2. Remember when this was going to lead to a BAILOUT of Deutsche and a run on the bank?
3. Remember when those who've seen the pathetic game DoJ has run for 8 years urged a little caution on that number?http://www.thefiscaltimes.com/Columns/2016/10/04/Justice-Departments-Deutsche-Bank-Crackdown-More-PR-Punishment …
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4. Well DoJ & Deutsche announced an agreement in principle tonight. It's $3.1 billion.https://www.washingtonpost.com/business/economy/deutsche-bank-agrees-to-pay-72-billion-to-settle-mortgage-abuse-case/2016/12/22/d3eac2b4-c6ca-11e6-bf4b-2c064d32a4bf_story.html …
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Don't get fooled by the headline $7.2 billion number. $4.1 billion is in "credits" for loan modifications. DEUTSCHE DOESN'T OWN THE LOANS.
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6. It's great that someone who needs it might get a loan mod but Deutsche is paying over half this penalty with someone else's money.
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7. Some (incl me) were concerned that Deutsche had no reason to comply with a settlement since their borrower Trump would soon be in the WH
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8. But before you think this deal sucks b/c DoJ lost their leverage, understand this is the same crappy settlement they've done w/every bank
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9. The worst part is that DoJ has changed norms (not just Trump) by turning these dumb settlements into a substitute for accountability.
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10. You sprinkle a small fine w/"help for homeowners" (which doesn't reach them to the degree promised), hold a press conference & smile
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11. BTW this was a case where investors were lied to about quality of mortgages in bonds. Do they see any restitution here? No.
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