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Various US banks collected a total of $110BN following the sale of low-grade mortgages. What ensued was the mortgage bubble; largely responsible for the housing crash and subsequent financial crisis. This Wall Street Journal article illustrates the distribution and use of fines amongst the Federal Government and States concerned.

The distribution of funds

Reports indicate that the US Government pocketed $50 billion of the $110 billion collected. Another $49 billion was sent to the U.S. Treasury. There are clear records of how the money was distributed amongst the states and various organizations. However, the Federal Government’s portion remains unaccounted.

Alarmingly, the banks that were fined also received a sum of money from this very pool. Those monies were then used to fund loans for low-income workers but not towards housing-related issues. It appears that large sums were allocated towards non-housing matters; building barns and stables in New York and subsidizing email for local police in Delaware.

It is still unclear how the Treasury is spending its share of the money. Spokesperson Rob Runyan was quoted as saying that funds are being “spent as Congress authorizes” as far back as March 2016.

Fraudulence and opaque governance; impossible on a blockchain

A major concern is whether government officials are using the funds for the public good or to line their pockets. While on the one hand, the U.S. Government levied fines on banks for their fraudulent methods, it is unable to disclose how these fines are being spent – a question of double standards.

It appears that banks audaciously go about their business without regard for the law or the interests of their customers. With banks transitioning to blockchain technology, an immutable ledger would capture all interactions with funds – an opportunity to address double standards. More than ever, cryptocurrencies like Bitcoin prove worthy as near-cash alternatives to free oneself from low-grade financial instruments and fraud.