Tuesday, August 24, 2010

Third Branch of Government Takes a Stand

With the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a/k/a H.R. 4173, and now known as PL 111-203, a cleaner, more accountable and open financial industry, seems to be at hand. This is particularly so for what now pass as "banks." [Of course, a banker from the 1930's whisked to 2010 by a time machine would be hard pressed to equate his definition of a bank what what we consider to be a bank today.]

But laws mean nothing without enforcement and enforcement, even of existing law, seems lacking at times. Well, here comes the third branch of government to the rescue. As reported in this articles from morning's NY Times - Judges Sound Off on Bank Settlements - federal district judges are declining to approve settlements offered up by the Justice Department to resolve cases pending against banks. From the story -
In a scene that is becoming increasingly common, Judge Emmet G. Sullivan of Federal District Court chewed out federal prosecutors at a hearing in Washington last week for a proposed settlement with Barclays.

“Why isn’t the government getting tough with banks?” he asked.

Just one day earlier in the same courthouse, Judge Ellen Segal Huvelle refused to sign a settlement between the government and Citigroup, demanding, “Why would I find this fair and reasonable?” She ordered government lawyers to return with answers next month.

The scoldings from the bench are a striking departure from a long tradition of judicial deference to settlements formulated by federal agencies, reflecting broad disenchantment not just with Wall Street, but with its government overseers.

As populist, anti-establishment, anti-bank fervor grips the country it seems almost incongruous that what is often considered the most conservative branch of government is taking the lead in bringing the financial industry to heel. Will this trend of judicial concern continue?

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