I don't pretend to be an expert in the criminal law, but I'm sure if you're average street person violates again while they're on probation, their violation is rarely “waived”. But, not surprisingly, it's different for banks. It seems that the SEC often makes deals with banks that provide that, should they run afoul of the law again, some sanction or other will kick in. But the SEC staff (after all, they've got future jobs at the bank to think about) routinely grant waivers and allow the banks to accept another wrist slap for whatever new crime they've committed. (And yes, I know the SEC has no criminal authority; I'm exercising blogger's license). New SEC commissioner Kara Stein pushed for, and got, a requirement that any such waiver be approved by the commission.
Obama's appointee as SEC chair, Mary Jo White, is in the pocket of the banks, but, alas for them, even she has to observe the proprieties, so she must recuse herself when the case in question involves one of her former clients, which, and it turns out this is lucky for us, it often does. That means there are two Democrats standing against two Republicans. Since White will usually vote with the Republicans, the waivers would go through were she to vote, but when she can't, well, a tie vote means the waiver is not granted, and the bank in question must actually suffer a penalty that actually hurts.
In a letter last week, the bank’s top lawyer Gary Lynch made a pitch to the agency’s commissioners to waive additional sanctions set to kick in when the settlement is entered in court, said the people, who asked not to be named because the entreaty was private. Lynch argued in part that the firm is being unfairly treated because other banks had been given waivers in similar cases.
A former SEC enforcement director, Lynch said saddling the bank with a penalty that could include barring it from selling investments in hedge funds would be unprecedented and cause reputational damage, the people said. The case remains in purgatory because SEC Chairman Mary Jo White is recused, while the agency’s Democratic and Republican members are deadlocked.
via Bloomberg News via Naked Capitalism.
I'm straining here to find a comparison to some other situation in the legal system that would illustrate how ludicrous this argument is. How's this: this is sort of like a cop convicted of murdering an unarmed black guy claiming he should be allowed to walk because all the other cops who've murdered unarmed black guys have been allowed to walk. Closer to the subject: this is like the first banker to actually be convicted of tanking the economy arguing that he should go free because Jamie Dimon still walks the streets. But who knows, the Supreme Court might buy into this sort of argument, so long as it is restricted to banks. That way, a soft glove administration, such as those run by W and Obama, could tie the hands of some future president or attorney general, who might just think we ought to enforce the laws when it comes to banks and bankers. Don't expect it to work in your neighborhood criminal court, though. Any public defender who made such an argument would be laughed out of court, and possibly sued for malpractice.
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