While BloombergView’s Matt Levine lays out in pretty simple terms what Wells Fargo did wrong in its mortgage lending [see our 'Stories of Interest' for 11/1], he also describes a fundamental change that’s taken place since 2008.  Let’s have a read:

Wells Fargo & Co has agreed to pay $50 million to settle a racketeering lawsuit accusing it of overcharging hundreds of thousands of homeowners for appraisals ordered after they defaulted on their mortgage loans," and I guess the trick is to get all of your awful-sounding settlements done in a relatively short window, so that people are still mad at you for the fake accounts and forget to get mad at you for the appraisal gouging.

The claim here is pretty simple: Mortgage agreements allow banks to charge homeowners for the appraisals if they default on their mortgage loans, but Wells Fargo added large mark-ups to the amounts its third-party vendors charged, the 2012 lawsuit said.

There is a long unspoken tradition in finance of thinking that if someone defaults on you, all bets are off. It is your right, even your duty, to gouge him everywhere you can, because he has broken the contract and put your money at risk. You should feel free to turn his default into a profit opportunity for you. You see this in Wells Fargo's appraisal markups, or in the Royal Bank of Scotland's controversial Global Restructuring Group, or even in JPMorgan and Citigroup's gleeful profiteering in the Lehman Brothers bankruptcy.

It's easy to see why. For one thing, you really are mad! You loaned him money in good faith, he didn't pay you back, and now you have to go to all the trouble and expense and worry of trying to get paid. Of course you want compensation for that worry. For another thing, he is not a particularly sympathetic character: He has broken his word, and no one is likely to take his side against you. He's a defaulter, a deadbeat, a failure, the enemy.

One big thing that has changed in banking since 2008 is that people no longer think that defaulters are the enemy. They think that banks are the enemy. This will have continuing awkward implications.

[Click here Wells Fargo $50M Mortgage Lawsuit for settlement details.]