Why $16.65 billion? Looking for rhyme and reason in big bank settlements E-mail Tweet Facebook Google Plus Linkedin Share icons by Laura Lorenzetti @FortuneMagazine August 21, 2014, 3:54 PM EDT Bank of America BAC on Thursday announced a settlement with U.S. authorities concerning its involvement with mortgage-backed securities that went up in smoke during the financial crisis. The $16.65 billion settlement is the largest of its kind, and nearly equal to the total penalties weighed against JPMorgan Chase JPM and Citigroup C combined. The settlement is divided up between civil penalties ($5.02 billion), compensatory payments to various agencies ($4.63 billion) and consumer relief ($7 billion). The way the settlement is divvied up may sound simple on the surface, but the reasoning behind the division of penalties is shrouded in mystery. From market watchdogs to mortgage lenders, many are feeling left in the dark about how U.S. officials construct these deals. “These settlements appear to be designed to be so dark so that there is no accountability for government officers, or the banks,” said Dennis Kelleher, president and CEO of Better Markets, a financial reform advocate. The division of payments isn’t decided based on standard amounts for each category, nor do the banks or government agencies involved provide details on how they portion out the funds received. “The fact that Wall Street banks want to disclose as little as possible I get,” said Kelleher. “But elected officers have a duty to do otherwise.” Consumer relief represents the majority of the money owed, although the proportion of the total is not constant or aligned with the scope of faulty loans issued. These funds, which are meant to ease the burden of loans for consumers, often end up hurting investors more than the banks themselves. Losses on loan write-downs end up trickling down to the holders of mortgage-backed securities, which were packaged and sold by the banks. Comparing the consumer relief sum levied with the total mortgage securities issued by each bank makes Citigroup’s $2.5 billion mandatory consumer benefits (2.7% of the total) appear draconian when compared with JPMorgan’s $4 billion (0.9%) and Bank of America’s $7 billion (1.1%). Citigroup’s percentage is more than double the amounts for the other two banks, even though they had significantly fewer faulty loans. Similar proportions apply when extended to the overall total settlement, seemingly proving critics correct: Government-issued monetary penalties lack a clear rhyme or reason.