WASHINGTON - Bank of America is set to pay nearly $17 billion for what it and two financial institutions it bought did to bring about the 2008 economic crisis.
That's equal to about three years of Bank of America's profits.
It's the largest settlement yet pushed on financial institutions for the selling of toxic mortgage-backed securities that spurred the collapse of the housing market and brought on the 2008 crisis.
The settlement is the latest instance of banks paying huge penalties for their supposed financial sins that helped bring the economy low in the 2008 crash - even if they didn't commit those sins themselves.
For instance, take the case of JP Morgan Chase. They had to pay $13 billion in their settlement with the Justice Department, amounting to half a year's earnings.
But some critics of the deal say JP Morgan Chase wasn't even involved in most of what the government called misconduct. Most of the misdeeds were perpetrated by Bear Stearns and Washington Mutual.
The government went to JP Morgan and asked it to take over those two failing banks as they and the economy were teetering. Then years later, they went after them for what the two failing banks did.
Phil Kerpen, head of American Commitment, described why he thought it was an ironic and unjust penalizing of JP Morgan.
"It was a shotgun wedding where the New York Fed said, 'Please take Bear Stearns,'" Kerpen explained. "And then to turn around and say, 'Well, you're responsible now legally for what Bear Stearns did - we're going to take it out of your shareholders.'"
Stephen Moore, with the Heritage Foundation, told CBN News it was fundamentally unfair for JP Morgan to be fined for what Bear Stearns and Washington Mutual did.
"And then the government's saying, 'By the way, you're going to have to pay fines and fees for what those banks did - the very same banks we insisted that you buy,'" Moore said.
"I think that is just a horrible message," Kerpen added. "It means in any future financial crisis, the healthier banks are going to say, 'I don't want anything to do with this.'"
Kerpen said Bank of America is in much the same situation as Morgan, paying for the sins of another financial institution it bought when pushed.
"You look at Bank of America," he said. "They didn't issue those Countrywide loans. They bought Countrywide afterwards."
And the Justice Department has gone after other banks as well. For instance, Citibanks? Their company Citigroup is coughing up $7 billion.
"This is a witch hunt against banks that weren't bad actors in the first place," Moore said. "Why are we going after them? We should be going after the sinners, not the people who were trying to help the recovery for us."
Some analysts say the Obama administration is pursuing these record settlements to try to placate critics who argue that the Justice Department didn't initially go after the banks hard enough for their actions before the economic crisis in 2008.
But others see darker motives behind Justice's pursuit of these record penalties.
A Wall Street Journal (ITALICS) editorial called the Justice Deptment's settlement with JP Morgan Chase last November "The Morgan Shakedown."
It said, "The lesson is how government has used the crisis to exert political control over even the most powerful private financial companies."
An Investor's Business Daily (ITALICS) editorial called the deal "Another Mugging on Wall Street."
A columnist for Time (ITALICS) magazine wrote that the Morgan settlement "…does absolutely nothing to make the financial system safer…Officials appear more concerned about appeasing anger over the financial crisis than doing the harder and more politically contentious work of re-regulating the banking system properly."
Kerpen agrees the Justice Department's actions aren't really helping matters. But he said they are hurting the economy because banks are so frozen in fear, they're leery of loaning money.
Instead, they're saving up billions in case they have to pay more fines in the future.
"It's very difficult to get loans," Kerpen said. "And that has a very negative impact on the economy, not just in housing, but across the economy, because small businesses in particular are finding it very difficult to get financing right now."
"Now all the banking system has this hammer hanging over it, which is the federal government and the Justice Department coming after them for practices they weren't even involved in," Moore added. "So I don't think it's fair. It stinks. And I think it's an abuse of the power of the federal government."
Kerpen said people like to go after "the big bad banks." But he pointed out these government moves are bad for shareholders, millions of people who invest their hard-earned cash in these financial institutions through stocks and mutual funds.
"They're in teacher and firefighter pension funds. They're in a lot of people's 401Ks," Kerpen stated.
"So when you go and you get money from 'the big bad bank,' you're really taking it from the shareholder," he explained. "And that's not necessarily an unsympathetic person if you think about who owns these stocks."