The Los Angeles Times used the Freedom of Information Act, best friend of taxpayers who want to know what public and private officials are hesitant to tell them, to obtain 1,600 pages of settlements the Federal Deposit Insurance Corporation made with banks and their officials and others involved in questionable deals from 2007 through this year.
Many banks have paid substantial settlements, though in sums that typically are a fraction of the damages to which they might be subject in a legal action. But the FDIC, The Times reports, figures it’s better to save money on litigation and get a guaranteed settlement.
Consider Deutsche Bank, the world’s largest, which paid $54 million to settle claims that a subsidiary sold bad loans to another bank, which collapsed. It was one of the early tremors in what became the great 2008 financial quake that rocked the financial industry on its heels and brought the United States to the brink.
If the Deutsche Bank deal seems obscure, that was the idea. As part of the deal, the FDIC agreed, said The Times, to not issue press releases and not talk about it. No publicity is better than bad publicity.
Elizabeth Warren, now a Democratic senator from Massachusetts, was the founder of the Consumer Financial Protection Bureau, which has broad responsibility for looking out for average people. She believes the Wall Street firms who help put the nation in financial crisis should have to face the music in court, not quietly avoid unflattering attention.
The FDIC’s practices, to use a business term, are not best practices. The public deserves to know the whole truth of the deals that are being made to return a fraction of what was lost during the financial crisis. And if that reddens faces on Wall Street, so be it.