Legal action is still taking place from the housing collapse of 2008. The settlement that Bank of America has reached with the Department of Justice has been in the news the past few days. The settlement is a record amount at $17 billion. Bank of America is to pay $10 billion in cash and $7 billion in consumer relief. The settlement is for its role in the sale of mortgage-backed securities from itself and those of Countrywide and Merrill Lynch that were acquired by Bank of America. This settlement is highly controversial. Some argue that settling is not enough and that officials should face incarceration and others feel that it is hurting corporate America.
So who really is to blame for the housing collapse of 2008? Most argue that the lenders issuing subprime loans to borrowers who could not afford them should be held accountable. What about the consumers who entered into the real estate market and home loans without doing any research? Certainly the actions of the lenders offering bad loans to uneducated consumers were deceitful, greedy and unethical. However, ignorance is not bliss as many Americans discovered after being wrongfully “guided” into bad loans. Many homeowners were being equally greedy by living beyond their means and financing much more than they could reasonably afford.
Ultimately both parties have fault for their actions leading up to the 2008 housing collapse. The difference is that most consumers have already faced the repercussions of their actions year ago when they lost their homes and everything they had. Most Americans just want these big lenders to see the same consequences.