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27 » VISIT US ONLINE @ DSNEWS.COM MCS Valuations is committed to providing the best possible service and most reliable value to our clients. Backed by industry-leading data and experts with decades of experience, MCS Valuations is your trusted resource for all of your valuation needs. 8 0 0 . 7 9 1 . 7 1 4 5 | M C S V A L U A T I O N S . C O M | I N F O @ M C S V A L U A T I O N S . C O M GOVERNMENT HOLDING INDIVIDUALS ACCOUNTABLE FOR THE CRISIS—SO FAR ALL TALK A memo issued by the U.S. Department of Justice in September 2015 stated that the department would seek to prosecute individuals and not just firms for their role in precipitating the financial crisis in 2008. Despite this memo, no announcements have been made regarding the prosecution of individuals despite three notable settlements with firms in the last five months. e Justice Department is not the only entity in the last few months to vow to crack down on Wall Street. Democratic presidential hopefuls Bernie Sanders and Hillary Clinton, their respective campaigns, have both vowed repeatedly to get tough on Wall Street banks and financial institutions that break the law. e latest settlement occurred last week when Morgan Stanley agreed to pay $3.2 billion to resolve claims that the investment banking firm misled investors as to the quality of mortgage- backed securities (MBS) in the run-up to the crisis. It was the fourth completed multibillion dollar settlement between the government and the largest financial firms over mortgage practices—with still no prosecutions of individuals. "One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetuated the wrongdoing," Deputy Attorney General Sally Q. Yates wrote. "Such accountability is important for several reasons: it deters future illegal activity, it incentivizes changes in corporate behavior, it ensures that the proper parties are held responsible for their actions, and it promotes the public's confidence in our justice system." In January, Goldman Sachs agreed in principle to a settlement for $5.1 billion over its MBS practices. When that settlement is complete, it will be the fifth multi-billion dollar agreement over the sales of toxic MBS between the federal government and financial institutions. e DOJ has settled with JPMorgan Chase (a then-record $13 billion in November 2013), Citi ($7 billion in July 2014), and Bank of America (a record $16.65 billion in August 2014) for selling toxic mortgage backed securities to investors in the run-up to the crisis. In early February, HSBC Bank reached a settlement for $470 million with several federal agencies and almost every state attorney general regarding "mortgage origination, servicing, and foreclosure abuses." e settlements may not be done yet—there is widespread speculation that Deutsche Bank will settle with the government over residential mortgage backed securities (RMBS) practices this year. ere is also speculation that the Royal Bank of Scotland will settle for a multibillion dollar amount with the FHFA for allegedly selling toxic RMBS to Fannie Mae and Freddie Mac before the crisis. While it has been less than six months since the Yates memo was issued, one must ask the question: Will the government hold executives from these firms accountable, or will the government continue to reach multibillion dollar settlements with the firms and be satisfied that justice was served?

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