New York Federal Judge Jed S. Rakoff

The Nation, August 12, 2009
Letting the Banking Rats Out of the Bag
By Robert Scheer

The good judge smelled a rat.

"Was there some sort of ghost that performed these actions?" New York federal Judge Jed S. Rakoff demanded to know Monday in rejecting a deal that would let Bank of America off the hook in yet another banker bonus scandal. The Securities and Exchange Commission had charged the bank with covering up for outrageous bonuses given out at Merrill Lynch as the bank acquired the failed stockbrokerage, and now it was letting the bank off the hook with a chicken-feed fine.

"Do Wall Street people expect to be paid large bonuses in years when their company lost $27 billion?" the judge asked, and Lewis J. Liman, the lawyer for Bank of America, assured him they do: "My God! Bonuses on Wall Street? It is not a matter of surprise."

But for those of us less sophisticated in the ways of Wall Street, it is a surprise that Merrill Lynch executives were rewarded for failure at the same time Bank of America was using $45 billion in taxpayer funds to take over the brokerage house. Six hundred ninety-six executives who helped run Merrill into the ground were granted more than a million bucks each.

BofA lawyer Liman attempted to put an egalitarian spin on this government-sponsored welfare for the superrich by pointing out that all told, another 39,000 Merrill employees averaged only $91,000 in bonuses, but the judge wasn't having it: "I'm glad you think that $91,000 is not a lot of money; I wish the average American was making $91,000."

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