Hm, What are the Choices Again?
One of the things that defines Conservatives is their hatred of regulators. One wonders why. It cannot be because regulators are effective at regulating, or are aggressive in punishing those who actions violate legal restrictions and the most basic tenets of decency. In fact, many times regulators just facilitate the improper actions of those whom they purport to regulate.
Case in point is the Securities and Exchange Commission and the Federal Trade Commission. The SEC brings enforcement action against financial firms. Their typical modus operandus is to allow the malefactors to get off with paying a fine and not admitting that they did anything wrong. Recently a Federal judge was outraged by this in a case where Citibank deliberately sold soon-to-be bad securities to investors and then profited by placing “bets” that the securities would fail. The SEC extracted a fine from Citibank, along with allowing Citibank to not admit to wrong doing.
The Federal Judge rejected the settlement, calling it ridiculous that a company could allowed to pay hundreds of millions in fines and not admit wrong doing.
In his ruling, the New York judge denounced as "pocket change" a penalty agreed to by Citigroup as part of the settlement, claiming it was paltry compared with losses of more than $700 million suffered by investors in a $1 billion deal called Class V Funding III.
Judge Rakoff also attacked the boilerplate language used in many SEC settlements, where defendants neither admit nor deny wrongdoing. If the allegations were correct, he wrote, "this is a very good deal for Citigroup," saying that it was hard to tell what the SEC got out of the agreement "other than a quick headline."
Instead of taking this admonition as a basis for getting tougher, the SEC is going to fight the judge, and try to continue its practice of protecting banks and other financial institutions from having to admit that what they did was wrong.
Some legal experts expected the SEC to respond to Judge Rakoff by trying to get a tougher settlement out of Citigroup. The agency alleged that the
company sold slices of the Class V deal to investors in 2007 without disclosing that Citigroup was betting against half the assets in the deal. New York
Instead, the SEC's staff essentially wants to go over Judge Rakoff's head. If SEC commissioners approve, the agency could appeal the Nov. 28 ruling to the Second Circuit Court of Appeals, people familiar with the situation said. Commissioners are expected to vote on the matter soon.
So not to worry Conservatives, your interests are being taken care of nicely by the SEC staff. The interests of the public, well that doesn’t really count.
Across town at the Federal Trade Commission, the agency that regulates debt collectors, the results are similar. One of the few growth industries of late is the debt collection industry, that’s what a prolonged recession will do. But the debt collection business is characterized by unethical and illegal practices, often highly abusive to people who do not pay their debt simply because they cannot pay their debts.
At the FTC the number of complaints is rising even as debt itself is shrinking.
The debt-collection industry, booming as many Americans struggle to catch up on their payments or walk away from what they owe, was the subject of a record 164,361 complaints through Dec. 8 of this year, according to the Federal Trade Commission. The total is 17% higher than the 140,036 debt-collection complaints the FTC got for all of 2010.
And the public will be pleased to know that the number of enforcement actions taken by the FTC is double what it used to be. Well, maybe no so pleased.
Since the start of this year, though, the FTC has launched just four enforcement actions against debt-collection firms under the primary federal law used to oversee the industry. From 2005 to 2010, the average was two cases a year.
That’s right, four whole cases, double the average of two cases per year in prior years. One can easily imagine the debt collection industry quaking with fear that a 25% rise in enforcement actions could happen next year, meaning there will be five, count em, five enforcement actions.
Now it is true that the FTC does enforce the laws by other methods, but the lack of enforcement actions is clear indication that those in the debt collection industry, like those in the financial sector, have nothing to fear from Federal regulators. (No one caught Bernie Madoff, he turned himself in when his scheme collapsed.). So the message to Conservatives is this:
Keep quiet people, you got a nice thing going. Make the American public pay attention to what regulators are actually doing and they might notice the lack of protection of their interests.