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Wednesday, February 13, 2013

Comments

David Morf

Apropos channeling Elizabeth Warren and her on-target hearing comment about "Too big to go to trial," here's a personally witnessed encounter on banks going to trial. This topic was hot when Stanley Sporkin ran the SEC Enforcement Division in the mid-1970s. Chairman Williams came to the SEC in part to derail Mr Sporkin, which Mr Williams denied the rest of his life, and Mr Sporkin denies to this day. But I sat across the conference room table on the top floor at the SEC’s 500 North Capitol Street building and witnessed a principled but fundamental private 1:1 debate whose bottom line from Chmn Williams came down to his statement that you just can't take such people to court, and to Mr Sporkin's reply that they broke the law and should stand trial. The truth is that a settlement is cash not reputation or precedent, and also that a settlement fine can be deducted from revenue as a cost of doing business. So the American people not only do not see wrongdoing expanded to include inculcating a business culture of “do it if you can get away with it,” but when you do get caught, the American people get to pay through the back door for a noticeable part of the fine or settlement. That has been the system in effect since Mr Sporkin was moved from the SEC to being the Chief Counsel of the CIA, where he could not embarrass senior business people or impact business and banking practices and interests. Even today, 2/18/2013, the NYTimes is running a story on how mortgage settlements are being gamed to benefit banks. As the old song has it, "The beat goes on..."

Gary Petz

Good for SEnator WArren and thank Massachusetts for electing her.

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