Finally, a Guilty Verdict for Wall Street

Has the government found a long overdue way to hold banks accountable for the financial crisis?

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FILE - In this file photo taken Oct. 8, 2010, the Bank of America building is shown at the Bank of America Plaza in downtown Los Angeles. Warren Buffett's Berkshire Hathaway is investing $5 billion in Bank of America Thursday, Aug. 25, 2011, sending its shares soaring by 24 percent.

"The Hustle." That's the name of a program run by Countrywide, the slimy subprime lender purchased by Bank of America in 2008.

Under the program, Countrywide brokers were paid bonuses to originate loans, firing them off to borrowers with less than stellar credit in an attempt to gin up quick profits. The loans were then sold to government-backed mortgage giants Fannie Mae and Freddie Mac, where they often went sour. At the same time, the firm was telling Fannie and Freddie that it had tightened its loan standards.

This sounds like a fairly typical tale from the financial crisis: Most of the nation's largest banks have, in one way or another, been accused of formulating sloppy loans and dumping them off on the taxpayer or of selling toxic mortgage securities to unwitting customers.

But there's a new twist to the old story: Yesterday, a jury found Bank of America guilty of fraud, the first time that a major U.S. bank has been held responsible by a U.S. court for actions tied to the financial crisis. The jury also held a former Countrywide manager liable for fraud.

[See a collection of political cartoons on the economy.]

All in all, it was a solid win for the Department of Justice. Could this possibly be a turning point in holding Wall Street accountable for pushing the U.S. economy to the brink of collapse?

That we're still wondering whether the banks will face any consequences for their actions more than five years after the financial crisis began in earnest is a pretty damning indictment of the Obama administration's approach to the matter. But the pendulum has begun to swing recently. Even the once-untouchable JP Morgan Chase – and its darling-of-the-financial-industry CEO Jamie Dimon – is on the cusp of a record-setting settlement with DOJ. (Though, as ThinkProgress' Alan Pyke ably noted, there's much less than meets the eye when it comes to the settlement's overall dollar amount.)

In the Washington Post, Ryan Cooper even posits that we're seeing the emergence of a new Democratic populism aimed at reining in the financial sector, personified by Sen. Elizabeth Warren, D-Mass., and New York City mayoral candidate Bill de Blasio. "There is still real anger over the special treatment Wall Street received, and the Dems could find a real vein of electoral gold – in addition to solving some real problems – if they start taking financial regulation seriously," Cooper writes.

[See a collection of political cartoons on Congress.]

And therein lies the real question: Can lawmakers summon the will to actually take on Wall Street or are a few good headlines from DOJ all we can hope for? The Dodd-Frank financial reform law was a good opening effort and, despite its imperfections, will make some difference in reining Wall Street. But there is still a lot that the law either left unaddressed or up to the interpretation of regulators who are bombarded by missives from Wall Street lobbyists. How the rest of the law gets implemented, and whether or not lawmakers can seize on the desire, from both left and right, to tighten other important regulations, will determine whether or not the financial system is remade or just given a fresh coat of paint.

And before we all get too excited, it's worth noting that the guilty verdict will, first, result in Bank of America facing a relative drop in the bucket when it comes to penalties, and second, required some legal jujitsu on the part of the government (which had to argue that Bank of America illegally harmed itself via the Hustle, since the statute of limitations on other charges had already expired) to even get across the finish line. But the case does provide something of a template for future prosecutions and shows that, with some determination, more big banks could theoretically be held to account.

On the downside, the former Countrywide manager who was held responsible for the fraud, of course, now works for none other than JP Morgan Chase. The more things change…

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