Thursday, August 6, 2009

Taking a Stand Against the Rich and Mighty

Perhaps the most annoying thing about the rich and mighty in this economic crisis is the innovative approaches they take to remain rich and might, whatever may take place on the fields of regulation and prosecution. There is thus a special kind of chutzpah among those who have power and are willing to apply it against that annoyance. Such an individual is Judge Jed Rakoff. He reminds me of the old lady in Hester Street who delivered the only line I remember from that film:

You can't piss up my back and tell me its rain!

I do not know if Judge Rakoff drew motivation from this line, but it strikes me as the inspiration behind today's report from BBC NEWS:

A US judge has refused to approve a $33m (£19m) fine that Bank of America agreed to pay to settle charges that it misled investors about bonuses.

Bank of America saved Merrill Lynch from collapse after telling its shareholders no bonuses would be paid to executives without their approval.

The Securities and Exchange Commission(SEC) alleged that the bank authorised Merrill to pay up to $5.8bn in bonuses.

The bank has neither admitted nor denied the SEC allegations.

"Despite the public importance of this case, the proposed consent judgment would leave uncertain the truth of the very serious allegations made in the complaint," Judge Jed Rakoff wrote in the complaint.

"The proposed consent judgement in no way specifies the basis for the $33m figure or whether any of this money is derived directly or indirectly from the $20bn in public funds previously advanced to Bank of America as part of its 'bailout'," he said.

Bank of America was bailed out by the US taxpayer in 2008. It needed capital injections from the bail-out fund during the height of the financial crisis.

The SEC said Merrill ended up paying £3.6bn in bonuses in 2008, even though it incurred heavy losses that year.

This is indeed recognition of a poor substitue for rain. Judge Rakoff knows better than to let the rich and might buy their way out of trouble, particularly when they are doing it with taxpayers' money! For this I take great delight in awarding him the Chutzpah of the Week award in the hope that he will continue to make sure our own backs are piss-free!

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