Judge to Bank of America & SEC: Not So Fast on Settlement

The Wall Street Journal is reporting that a U.S. District Judge has refused to endorse the proposed $33 million settlement between the Securities and Exchange Commission and Bank of America Corp. in response to bonuses promised and paid by Merrill Lynch, now a subsidiary of Bank of America.  As previously argued on this blog, the fine made absolutely no sense because Bank of America was being proped up with government money and was being forced to pay this fine to the government.

Ultimately, this issue brings up the problems with trying to punish companies that have received government bailouts.  How do you enfore a rule by using a fine if they could essentially be using funds received from the agency that is fining them?  Now obviously it was not the SEC that bailed Bank of America out, but a government agency is still controlled by, you know, the government.

Just another example of the messes that government oversight can bring.