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Sunday, April 11, 2010

Judge Jed Rakoff taps into nation's outrage over economic crisis

By Nathaniel Popper
April 10, 2010
Reporting from New York
The economic crisis has brought out the populist in many politicians and others. Among the more unlikely ones may be a silver-bearded federal judge who has wasted no chance to tell the country's biggest banks what he thinks about how they operate.

When Bank of America Corp. was trying to settle civil charges over its conduct in its purchase of Merrill Lynch, U.S. District Judge Jed Rakoff wrote that the bank's executives had led what "could have been a bank-destroying disaster if the U.S. taxpayers had not saved the day."

Addressing how the firm pays its top people, the judge spoke in February of "the incredibly bloated compensation of too many executives in too many American companies."

In another case, Rakoff called JPMorgan Chase & Co.'s handling of a major client improper at the very least, "if not a downright sham."

He condemned not only big banks but also their regulators, saying the Securities and Exchange Commission's enforcement in the Bank of America case did "not comport with the most elementary notions of justice and morality."

"He has tapped into some of the national and populist outrage that has followed the economic meltdown," said Anthony Barkow, executive director of the Center on the Administration of Criminal Law at New York University. "He's made an intellectual and legal case for what a lot of people are thinking based on their own common sense."

Rakoff has even become a reference point in the legal world. In chastising the SEC last week in the online magazine Slate, Eliot Spitzer, who as New York attorney general took on Wall Street, pointed to Rakoff's rulings. When another judge criticized the SEC recently, a Wall Street Journal blogger said that judge had "pulled a Rakoff."


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