"With Tuesday's $13 billion settlement with J.P. Morgan JPM +0.74% over the sale of mortgage-backed securities, the Justice Department has finally solved the mystery of the financial crisis. Turns out that the bankers did it—to each other, and even to themselves.
We've been critical of this government plundering of a bank that did not need a bailout in 2008, but we defy anyone to follow the logic of Tuesday's Morgan agreement.
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In Justice's press release, U.S. Attorney for the Eastern District of California Benjamin Wagner describes "credit unions, banks and other investor victims" who bought mortgage-backed securities that included "toxic" loans. The government claims that Morgan ripped off other financial institutions when it sold them bundles of mortgages. But the alleged victims include institutions where the government has separately accused managers of their own mortgage misdeeds.
Another problem with this settlement is that even though the government says that institutional investors were the victims, much of the $13 billion is going elsewhere."...
"toxic" securities. They wouldn't have been toxic if the real estate market had continued to grow. Buyer beware right? Smart people had to know the jump in the price of housing wasn't sustainable while wages were flat.
Will the Feds eventually be accused of peddling toxic assets when they sell new bonds that any reasonable person knows we can't pay off?
Thomas Sowell: There are no solutions, just trade-offs.
