Bank of America to pay $17 billion
Have you heard that the US government has fined Bank of America 17 billion dollars in relation to the financial crisis of 2007? Anyone knows why they have to pay all that money? What in the world did they do wrong? Is it just revenge that taxpayers are trying to get or is there a more solid argument behind all this?
The accusations, and they are sadly very true it seems, is that part of Bank of America's operations were lying to their clients. They were selling financial products to their clients by presenting them as "safe" while they perfectly knew they were "risky". This was actually not only their doing but also the doing of rating agencies that labelled these products as AAA (very very safe) without really looking into it...
In fact, some of these financial products were so complicated that the banks that created them did not even understand them themselves! That led to a chain of bad incentives that ultimately brought the financial crisis of 2007. Thanks!