Are we all just numb?
There seems to be a lack of outrage over the Libor scandal considering its scope, but perhaps there is an exhaustion or frustration factor with what appears to be a lack of accountability. While it is hard to keep a score card, the credit crisis of 2008 that resulted in the failure of Lehman and multiple bailouts, including TARP, that led to the great recession is ground zero.
There have been no criminal charges filed and the civil cases have left many dissatisfied. Case in point, Judge Jed Rakoff vs. the SEC. In what looked to be a routine filing last November, the SEC charged Citigroup with negligence in selling a $1 billion investment product tied to housing in 2007 without telling investors it was betting against it. Citigroup agreed to pay $285 million and be on its way, “without admitting or denying wrongdoing.”
What wasn’t routine is that it would be sent to Judge Jed Rakoff of the Federal District Court in Manhattan for approval. Rakoff had disallowed an SEC settlement with Bank of America in 2009 on similar grounds. He rejected this one noting that if the charge were true, then the penalty was not strong enough. In ordering the case go to trial, Rakoff wrote, “The SEC, of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if fails to do so, this Court must not, in the name of deference or convenience, grant judicial enforcement to the agency’s contrivances.”