Matt Taibbi in Rolling Stone really gets to the heart of Rakoff’s ruling in the Citigroup settlement:
This issue of whether or not the SEC must consider the public interest in granting these cozy settlements gets to the heart of the Occupy Movement’s central complaint, that there are two different sets of rules for two different Americas. The SEC in this case incredibly argued – out loud, on paper – that it could make regulatory decisions without considering the public interest. In particular, it argued that it didn’t need to consider the public interest when granting “injunctive relief,” i.e. an injunction barring future behaviors, as opposed to the stiffer and more immediate punishment of fines or criminal charges.
The SEC argued to Judge Rakoff that “the public interest … is not part of [the] applicable standard of judicial review.”
Translating: “When we decide to let a thieving megabank off with just a promise to never do it again, we don’t have to consider whether or not this is in the public interest.”
If you stand back and really think about what this argument means, it’ll make your head spin. What the SEC is saying here is that according to the incestuous values of the small community of high-priced revolving-door lawyers who both head the SEC enforcement office and run the defense teams of banks like Citi, a $95 million fine with no admission of wrongdoing for a $700 million fraud is, in fact, “fair” and “reasonable.”
The settlement only becomes problematic, the SEC implies, if you ask them to square their judgment with “the public interest.”
The SEC, in other words, is admitting that they have a standard for “reasonableness” and “fairness” that somehow does not coincide with the public interest. This surreal formulation translates as, “We’re doing the right thing – we’re just not doing it for the public.”
Rakoff’s response to this lunacy:
A large part of what the S.E.C. requests, in this and most other such consent judgments, is injunctive relief… The Supreme Court has repeatedly made clear, however, that a court cannot grant the extraordinary remedy of injunctive relief without considering the public interest.
The Rakoff ruling shines a light on the way these crappy settlements have evolved into a kind of cheap payoff system, in which crimes may be committed over and over again, and the SEC’s only role is to take a bribe each time the offenders slip up and get caught.
If you never have to worry about serious punishments, or court findings of criminal guilt (which would leave you exposed to crippling lawsuits), then there’s simply no incentive to stop committing fraud. These SEC settlements simply become part of the cost of doing business, as Rakoff notes:
As for common experience, a consent judgment that does not involve any admissions and that results in only very modest penalties is just as frequently viewed, particularly in the business community, as a cost of doing business imposed by having to maintain a working relationship with a regulatory agency, rather than as any indication of where the real truth lies. This, indeed, is Citigroup’s position in this very case.
That line, “a cost of doing business imposed by having to maintain a working relationship with a regulatory agency,” is one of the more brutally damning things you’ll ever see a judge write. Rakoff is saying that these fines are payoffs to keep the SEC off the banks’ backs. They’re like the pad that numbers-runners or drug dealers pay to urban precinct-houses every month to keep cops from making real arrests. That’s what he means when he refers to “maintaning a working relationship.” It’s heavy stuff.
On the other hand, both the SEC and Citigroup insist that this secretive payoff system is defensible and must continue. They clearly believe, sincerely, that none of this stuff is really the public’s business.
This is an extraordinarily condescending attitude and shows exactly how little they think of the public at large. One wonders if decisions like Rakoff’s will at least help to wake the government up.
This is what Taibbi does best. Today in England we are seeing the largest strike against austerity measures since 1926. The last time we saw worldwide labor unrest on this scale (the Middle East, Europe, etc.) the Capitalists gave us the Great Depression. Act II was the rise of Fascism (state operated Socialism or Corporatism) . The Capitalists final act was World War II. (50 million workers dead, dozens of countries destroyed, wealth transferred to the top, and the world realigned.) The Zionists believe that they can start World War III by attacking Iran. “Come now, you rich, weep and howl over your miseries…….you have feasted upon the earth, and you have nourished your hearts on dissipation in the day of slaughter,” “He who has an ear, let him hear…..”
BBC was asking whether the non-unionized, no pension part of the population would stand with the strikers. They will be so inconvenienced. Parents would have to stay home with their children or pay for their care. No transportation to work excpet cars and shank’s mare. And so forth.
Of course, losing a job with no hope of finding a new one, having their social safety net shredded is also very “inconveniencing.”
In their philosophy, there is no “public”, there is only a mass of sovereign individuals who have consented to give up a little bit of their self interest to accomplish a few things that they cannot conveniently do on their own. This is a completely and imaginary theoretical situation that exists only in their mental ideology.
The alternative is the simple obvious fact that we are born into a social network of relationships, and actually have to carve out a small space of individual identity. The “public” existed literally before the private and you can’t get rid of it. Even the land was shared public space before the invention of “private property” enforced by the power of the nobility to take common land for their own use by force. The more they take for themselves, the less the rest of us have to live on, and lacking access to the means of survival we have to go into debt to the lords just to live as tenants on their land.