Nathan Scandella (personal)

This is a Penalty?

Today it was announced that Bank of America would have to pay a $33M fine for failing to disclose the nearly $6B of bonuses Merrill Lynch planned to pay employees, when asking for shareholder approval of their merger.

$33 million, with an "M"? That doesn't even qualify for interest on a sum such as $6B. It turns $6B into $6.03B. You have to be kidding me?

Bank of America just reported that it had a fantastically profitable quarter, once again, thanks to taxpayer support. $33M also doesn't qualify as interest on the profit they turned in Q2. Unless a sum of money significant enough to be noticed is used as a penalty, there is virtually no incentive for Bank of America, or anyone watching this outcome, to play by the rules in the future.

If the government can take Big Tobacco to the cleaners for failing to disclose its products' downside to consumers, banks should be held to the same standard. This is a clear-cut case of criminal lack of disclosure, and the penalty falls woefully short of fitting the crime.

Posted at 09:50PM Aug 03, 2009 by Nathan in Economics  |  Comments[0]