Questions like: Who, exactly, in your bank directed the rip-off? Who made these stupid decisions? Who — by name — is accountable for this mess?
The White House really doesn’t seem interested in pressing these questions. The chairman of the Senate finance committee and the head of the house banking committee have been too polite to keep probing them. And, of course, Republican leaders don’t even want to know the answers.
But, wait a second — who’s this guy, this guy in New York who has dared to confront some of the biggest Wall Street elites and demand answers? You’ve probably never heard of Jed Rakoff, but he’s a federal district judge whose Manhattan court gets many of the cases involving the financial powers.
He spent much of August grilling some bankers and bank regulators about the outrageous bonus payments that Merrill Lynch slipped to its top executives in the midst of last summer’s Wall Street meltdown.
You might recall that Merrill had essentially collapsed in 2008, having lost an astonishing $27 billion due to the greed and incompetence of its top investment bankers. Rather than letting this failed firm actually fail, however, the Bush regime engineered a quickie takeover of Merrill by Bank of America. The key to this rescue was you and I — $45 billion from us taxpayers were doled out to Bank of America to grease the merger.
But — shhhhh — just before the deal was complete, those slap-happy bankers at Merrill quietly paid themselves $3.6 billion in bonuses! The shareholders of both Merrill and B of A were not informed of this heist. Nor were the White House, the Congress and such oversight agencies as the Securities and Exchange Commission.
Merrill’s grab for the cookie jar was so underhanded and shameless that even the SEC was compelled to investigate. This agency has become more of a Wall Street lapdog than watchdog, so it was not surprising that the agency officials concluded in early August that the whole sorry mess could be swept under the rug by assessing a measly $33 million fine on Merrill (which had become a fully owned subsidiary of Bank of America). Thirty-three million bucks is chump change to these banks. Come on, some of the bonuses paid to individual Merrill bankers were bigger than that!
Still, the SEC had ruled, so that was that. Except for one little detail: The agreement between the government and the banks had to be rubber-stamped by the federal court.
Enter Judge Rakoff. Far from wielding a rubber stamp, he refused to OK the agreement and immediately began demanding answers from the big-shots involved.
Noting that the banks had “effectively lied to their shareholders,” he wanted to know the names of the liars, suggesting that those “who made the wrongful decisions” should be held personally accountable. Also, Rakoff pointedly asked the kind of questions that folks all across the country would ask if they had the chance, such as, “Do Wall Street people expect to be paid large bonuses in years when their company lost $27 billion?” The judge also went after the SEC, calling its meek fine “strangely askew” and bluntly telling the agency’s lawyer that his feeble explanation for the low fine “seems so at war with common sense.”
Bank and SEC officials are squawking and squirming, but Rakoff has not backed off even by an inch.
I like this guy! Can we dismiss Timothy Geithner and put Judge Rakoff in charge of the bailout scandal? Pretty please.
Jim Hightower is a national radio commentator, columnist and author.