President Obama’s pick of Mary Jo White, a former white collar crime prosecutor, to head the Securities and Exchange Commission is getting lots of high fives from folks who believe it’s time the country got tough with the people who bend the financial rules to pad their own pockets.
Gretchen Morgenson, the crack business reporter and columnist for the New York Times, says the president’s pick of White is sending a message that the government is finally going to stop playing footsie with the “banksters” and others who for too long now have been taking advantage of lax oversight and getting away with it.
Very few, for instance, have paid a real price for the illegal manipulation that eventually led to the economic crash of 2008.
That’s been because the SEC has routinely let companies and individuals settle cases against them without admitting to its findings. Morgenson points out this lets “bad actors” pretend that they’ve done nothing wrong and it also makes it hard for investors who have been harmed to mount successful lawsuits against them.
You read about this practice all the time. Some huge international corporation will settle a suit for a hefty sum of money — a sum that probably makes but a small dent in its overall bottom line — but at the same time claims that it doesn’t admit to doing anything wrong.
Government regulators contend that this is the best way to avoid lengthy and costly trials, plus it’s better to at least get some money through a fine rather than risk losing a trial.
The problem, though, is the irresponsible corporation gets off with what amounts to a wrist slap, and since the fines can be written off and their cost passed on to shareholders, no one (except shareholders) suffers any real punishment. Wall Street money manipulators who caused the financial meltdown of the late 2000s, which cost millions of Americans their jobs and often their homes and savings, never wound up being punished.
Morgenson believes this will change under White, who made it a priority when she was U.S. attorney for the southern district of New York to require admissions from defendants in civil fraud cases. The man she hired to litigate those cases, Preet Bharara, believes strongly that those who have committed wrongdoing have a responsibility to tell the truth.
“They should have to admit that they engaged in bad conduct for all the world to see,” he adds.
From all indications, Mary Jo White still feels that way. Many Americans will say it’s about time.
Dave Zweifel is editor emeritus of The Capital Times. firstname.lastname@example.org