Band of America ‘record settlement’

I don’t have a problem with pension funds being repaid per se, but it seems crazy to me that no one seems to give a shit about helping the individual homeowners whose lives were ruined by this pirate banking system:

As with the preceding JPMorgan Chase and Citigroup deals, questions have arisen about how much of the money will make its way to investors who purchased the securities. These are the people directly affected by the alleged misdeeds, but there is no specific carve-out to compensate investors, whereas funds are set aside to provide relief to homeowners and blighted communities.

One select group of investors is receiving some relief: public pension funds.

Almost $1 billion of the Bank of America settlement will go to states — California, Delaware, ­Illinois, Kentucky, Maryland and New York — whose attorneys general were investigating the bank or its Countrywide Financial or Merrill Lynch units. Those state prosecutors have earmarked that money for the retirement funds of teachers, police officers and fire fighters.

“One of the benefits of a resolution like this is we can actually begin to compensate public pension funds that were victims,” Associate Attorney General Tony West said during a news conference announcing the Bank of America agreement Thursday.

Both of the previous mortgage-securities settlements included state allocations that were used to replenish government pension funds ravaged by losses on risky mortgage bonds, West said. More than $1 billion of JPMorgan’s $13 billion agreement last year and $291 million of the $7 billion Citigroup deal in July went to states.

Public pension funds across the country invested heavily in mortgage securities in the run-up to the financial crisis. Returns on the deals were attractive, but the pools of home loans underpinning the securities were flawed.