With two of the nation’s banking behemoths agreeing today to pay $18 billion in civil penalties for laxity leading up to the mortgage-debt crisis of 2008, the U.S. has passed yet another milestone in its economic and financial rebound. Progress has come at such an excruciatingly slow pace filled with infuriating antics by leaders on both sides of the aisle that you may not even notice the good news: We’re putting the financial crisis behind us.
Winston Churchill during World War II reportedly once said: "You can always rely on the Americans to do the right thing—after they have exhausted all other options." Dead for over a half-century, Churchill’s famous quotation still rings true today, underscoring the brilliance of the wartime British Prime Minister and putting in proper perspective an American predilection to go out on the edge of a cliff before doing what’s right.
That was the case Monday, when federal regulators reached an $8.5 billion settlement with 10 major lenders, including JPMorgan Chase, Bank of America and Citibank, resolving claims by consumers of foreclosure abuses by banks. Meanwhile, in a separate legal settlement, The New York Times reported that Bank of America agreed to pay Fannie Mae $11.65 billion to settle claims over troubled mortgages that tanked in the housing bust, mostly loans issued by the bank’s Countrywide Financial subsidiary.
Some will argue that the settlements failed to compensate consumers sufficiently. Some will say banks were not punished harshly enough. These points can be argued. I would have liked for at lkeast one CEO to serve jail time.
Easily lost in the news about fallout from the financial crisis is that the American economy is coming back. The fiscal cliff deal last week showed Washington at its ugliest. Congress seemed nearly dysfunctional and the pending fight over the federal spending ceiling promises to be another slow-motion wreck.
But problems are being solved.
Economist Fritz Meyer spoke today at at a webinar for A4A members. He's been chronicling the steady improvement in fundamentals behind the economic recovery. The improving economic numbers, too, have been emerging slowly, as if to take two steps forward and one step back. But the data support the case for a comeback.
While much cleanup from the 2008 financial crisis remains to prevent the next fiscal crisis over the next several decades, and while Dodd Frank has turned into a painfully slow and frustrating process of reforming financial institutions, the American system is, at long last, working.
Yes, you can count on Americans to consider wrongheaded ideas. Eventually, however, we'll do the right thing.