The end of the year occasions awards season in all industries, and the world of personal finance is no exception, which brings us to the 2014 edition of my Piggy Bank Awards for Dubious Achievements in Consumer Finance or, for short, "The Piggies."
And what a year of very dubious achievements it was. Loan servicers continued to stick it to mortgage clients, except when the servicers turned out to be sticking it to student loan borrowers. The big mortgage banks that caused the Great Recession continued to buy their way out of trouble. Top law enforcement officials continued to collect hundreds of thousands of (mostly tax-deductible) dollars in fines for criminal activity by banks, while remaining unable to find even one actual banker who committed all those criminal acts.
Naturally, bank customers will end up paying those fines in the end, thanks to ever-higher bank fees on customer accounts.
So, to quote Dickens, "It was the best of times. It was the worst of times" — except for that whole "best of times" part.
And the winners are ...
The Still Feeding at the Trough Award: According to Bankrate.com, bank customers paid 6.5 percent more for ATM surcharges this year, 1.7 percent more for a bounced check, and had to keep more money than ever in low- or no-interest checking accounts to avoid even higher service fees.
The Under My Hoof — Forever Award: The very talented Jessica Silver-Greenberg of The New York Times said it all in November: "Some of the nation's biggest banks ignore bankruptcy court discharges ... (and) keep the debts alive on credit reports, essentially forcing borrowers to make payments on bills that they do not legally owe."
The banks in question and under investigation by the Justice Department include JPMorgan Chase, Bank of America and Citigroup. If that list sounds familiar, it's because you've already seen all of those names in print this year about other illegal deeds, followed by the phrase, "will pay $X million in fines to settle criminal charges."
Best Piggy in a Supporting Role: U.S. Attorney General Eric Holder, who continued to let big, repeat offenders off the hook. Bank after bank agreed to pay criminal fines worth up to billions of dollars for mortgage fraud and other illegal acts. But not one single banker is behind bars for committing any of those criminal frauds. Worse, much of the billions of dollars in fines and settlements is reduced by being tax deductible for the banks, or they receive credit for wiping out debts they would never have collected, such as second liens on foreclosed homes.
Take the $16.5 billion fine levied against Bank of America this year, of which $7 billion will be in loan adjustments to homeowners, some of it already uncollectable. Of the remaining $9.5 billion, the bank will likely claim $1.6 billion in tax write-offs, according to some analysts, who put the actual cost to BofA at around $7 billion. And BofA has until 2018 to make good. Last year, the bank collected more than $10 billion in profits, so it can basically pay off the entire huge fine in about nine months for illegal activity that sparked a three-year worldwide recession for which we are all still paying today.
If you want any further proof of how lightly Holder spanked the porkers at BofA, consider this: The day the settlement was announced, BofA stock jumped by 4 percent. So we can be sure the (not) guilty executives won't do that again — unless they need a quick boost to the share price. Way to make that piggy squeal, Mr. Attorney General!
And one last question, sir: So, if there aren't any criminals to charge, who is it who keeps committing all these financial crimes?
The Serviced With a Smile (and Fraud) Award: Mortgage servicers — the arms of banks and independent firms that collect mortgage payments and handle paperwork on home loans — continue to "service" many troubled homeowners right into foreclosure instead of loan modifications. Both Bank of America and Citi recently failed tests under another legal settlement for loan servicing. And just last week, New York state fined Ocwen Financial for all the exact same problems that caused the Justice Department and 49 state attorneys general to fine servicers $25 billion back in 2012: missing paperwork, improper foreclosures and fraudulent robo-signings. The company will pay a $100 million fine and $50 million in restitution to victimized homeowners.
Of course, that's chump change compared to the $2.1 billion settlement Ocwen agreed to pay at this time last year (without being forced to admit wrongdoing, of course) after regulators charged the servicer with — guess what? — mistreating homeowners.
The Serviced With a Smile (and Fraud) Award — Student Division: In an October report, the Consumer Financial Protection Bureau found that some servicers of student loans were as bad as the servicers of mortgage loans, complete with illegal practices, misinformation and inflated abusive fees. The servicers also botched information needed for borrowers to deduct student loans on taxes, engaged in illegally abusive collection processes, and misrepresented bankruptcy information to borrowers in trouble.
Piggy Friends With Benefits Award: The odds that I'll be coming up dry when it comes around to dredging through the swine trough for the 2015 Piggies seems small to nonexistent, thanks to spineless Democrats and craven Republicans who just shoved through the so-called "cromnibus" legislation before recessing for Christmas. The bill watered down provisions aimed at reining in big banks and preventing another banking meltdown.
But the bankers won't get off for free. Instead of paying big fines, the cromnibus allows them to up their contributions to political party committees by a factor of 10. And here I thought the way to call pigs was just by shouting, "Sooie!"
Coincidence? I call it hogwash.
Brian O'Connor is author of the award-winning book, "The $1,000 Challenge: How One Family Slashed Its Budget Without Moving Under a Bridge or Living on Government Cheese."