When Attorney General Eric Holder announced his resignation yesterday, Bloomberg’s Tom Schoenberg praised him for having “spent the past year making up for lost time in an effort to hold banks accountable for their role in the 2008 financial crisis.” Among Holder’s chief accomplishments, according to Schoenberg, is negotiating a record settlement in which Bank of America agreed to fork over $16.65 billion to settle charges it and companies it had purchased, including Countrywide and Merrill Lynch, had deceived investors to whom they sold mortgage-backed securities. But how much from this settlement goes to the investor victims? Nada!

Far from holding bank executives accountable for misdeeds, the settlement, which Holder announced on August 21 with much fanfare, doubly punishes Bank of America’s shareholders and investors in its mortgage-backed securities, whom Holder and other government officials maintain are the victims.

In fact, the settlement transfers billions from defrauded investors to random borrowers who may not have been defrauded or may even have committed fraud themselves, as well as to ACORN-like housing advocates calling for a return to policies that fomented the crisis. More than $9 billion goes to the federal and various state government coffers. And, as Holder proclaimed, “the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers, and communities affected by the bank’s conduct.”

But whatever Bank of America’s misdeeds — and there were many — there is no justification to take from the investors, whom the government itself says were the victims, to give to homeowners who were never alleged to have been defrauded, as well as to activist groups that try to intimidate banks and investors into making more bad loans that could further threaten the financial system.

And who is actually paying out the $16.65 billion? Not the Bank of America officials who committed the misdeeds, but the very shareholders and investors who were victims of the company’s deception. Holder’s DOJ did not require any current or former employee of Bank of America, Countrywide, or Merrill Lynch to pay one red cent.

The bulk of the money will come from the corporate treasury, which belongs to all shareholders. As former SEC Commissioner Paul Atkins has warned, when corporate penalties are levied to punish shareholder fraud, the company’s shareholders are “penalized twice — once by the fraud and again by the civil penalty.” If executives know that it’ll only be shareholders’ money that’s forked over if they commit fraud, what incentive is there to stay honest?

And shareholders are not be the only victims to be punished twice. The very investors who were sold the fraudulent mortgage-backed securities, including pension funds that serve middle-class retirees – will be forced to take another haircut.

A press release from Holder’s DOJ boasts that the settlement’s $7 billion in borrower “relief will take various forms, including principal reduction loan modifications that result in numerous homeowners no longer being underwater on their mortgages.” Put aside the fact that there were no claims in this settlement that Bank of America committed fraud against borrowers or homeowners, only investors. Put aside the fact that many homeowners who knowingly borrowed more than they could afford will now be rewarded with this “relief.” And put aside the fact that there appears to be no mechanism to prevent borrowers who committed fraud – and there were many, hence the term “liar loans” – from receiving these billions.

The biggest outrage is that this much of this “relief” will come not from the coffers of Bank of America, but from the very investors who now hold the fraudulent mortgage-backed securities it sold to them. A DOJ summary of the “consumer relief” states that the company will receive credit toward the settlement for “forgiveness on loans serviced by Bank of America but owned by other investors.”

This is the continuation of an unfortunate trend, begun in the Bush administration, of rewarding and cajoling banks for forgiving loans that are serviced by the bank but owned by other investors — a phenomenon my colleague Hans Bader calls “a bounty on your 401(k).”

And that brings us full-circle to Holder’s two big bogus claims about the settlement: that it serves the interest of “justice,” and that it promotes “the stability of our economy.” Our economy can never function properly if the unjust abrogation of contracts of mortgage investors continues to be encouraged by opportunistic politicos.

As Greenwich Financial Services CEO William Frey, author of the acclaimed book Way Too Big to Fail and plaintiff in one of first investor lawsuits against Bank of America over mortgage issues, aptly puts it:

Investors from around the world are watching and asking: if they buy U.S. securities, will they need to factor in a risk that they never before anticipated — that the U.S. government will alter the contracts supporting their investments without compensation.

These investors may be taken aback when they learn that funds from the settlement may go to an activist group that sought to directly intimidate Frey and other investors when they asserted their rights against Bank of America. In 2009, after Frey said he would sue if Bank of America participated in government-backed loan modifications without compensating investors for what is owed to them under contracts, the Neighborhood Assistance Corporation of America, whose director calls himself a “bank terrorist,” led a trespassing “protest” on the front lawn of Frey’s home in Connecticut.

Now this organization is on the list of groups approved by the Department of Housing and Urban Development to get aid from the settlement, reports Investors Business Daily.

So in banking, Holder’s clear legacy is in letting fraudsters go free and rewarding destructive housing activists, while doubly punishing the true investor victims.

John Berlau is senior fellow for finance and access to capital at the Competitive Enterprise Institute.