President Obama and the Democrats have made an overhaul of Wall Street their No. 1 legislative priority. The president and his party also say they're ready to carry the battle against corporate greed and excess into the Senate hearing room where Obama's Supreme Court nominee will be peppered with questions from left and right.
"I think what people are going to do is say, 'Do you share our concern about the fact that the court always seems to side with the big corporate interests against the average American?'" Senate Judiciary Committee Chairman Patrick Leahy told Politico. "I think there's going to be more of the public realizing they really do have a stake in who's on the Supreme Court."
If all of this is anything more than political posturing, the president's choice for the high court should be a no-brainer: Obama should put Jed Rakoff on the high court.
The 66-year-old federal jurist shocked the legal and financial worlds last year by rejecting a $33 million settlement between the Securities and Exchange Commission and the Bank of America. The bank had purchased Merrill Lynch without telling its shareholders that executives of the ailing brokerage were paid $3.6 billion in bonuses shortly before the takeover was announced.
The common-sense wisdom of Rakoff's ruling resonated with a public infuriated with billion-dollar bonuses and bailouts. The SEC signed off on a deal in which the bank agreed to pay $33 million (in shareholder money) for concealing the bonus payments from the shareholders. In effect, the victims were being punished, a topsy-turvy outcome fairly typical of the SEC's handling of wrongdoing by large corporations in cases like these.
"Oscar Wilde once famously said that a cynic is someone 'who knows the price of everything and the value of nothing,'" Rakoff wrote.
The proposed consent judgment in this case suggests a rather cynical relationship between the parties: the S.E.C. gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger; the Bank's management gets to claim that they have been coerced into an onerous settlement by overzealous regulators. And all this is done at the expense, not only of the shareholders, but also of the truth.
Last month, Rakoff reluctantly agreed to accept a $150 million settlement, calling it "half-baked justice." Despite his lack of enthusiasm for the deal, the judge did find a hero, noting that the merger between the bank and Merrill could have been a "bank-destroying disaster if the U.S. taxpayer had not saved the day."
Besides having that too-rare sympathy for the average American and the courage to take on the mega-powers of government and Wall Street, Rakoff is fully qualified for the high court, both personally and professionally.
Some of his past decisions won't have most Republicans turning cartwheels. Since he was named to the federal bench by President Clinton in 1995, Rakoff has built a judicial resume that includes overturning the federal death penalty (reversed on appeal), thumbing his judicial nose at federal sentencing guidelines, and forcing the Pentagon to reveal the names and nationalities of hundreds of detainees held at Guantánamo Bay.
But his personal life is impeccable. The judge is a workaholic who neither smokes nor drinks, according to friends and colleagues. He enjoys Broadway show tunes and once dreamed of becoming a lyricist. The judge and his wife of 35 years, Ann, have three daughters and enjoy ballroom dancing.
And unlike a certain Chief Justice of the United States Supreme Court who shall remain nameless, if Rakoff tells you he'll be guided by legal precedent, you can count on it.
Lawyers who know Rakoff mention three qualities that mark his style as a jurist: intelligence, independence and a thoroughness that can turn the resolution of an apparently routine legal question into a day-long hearing.
The judge is admired for legal opinions filled with sharp writing and laced with wit. His legal hero is Benjamin Cardozo, the Supreme Court justice from New York whose lofty reputation rests partly on his writing skill.
He was born in Philadelphia and, after graduating from Swarthmore in 1964, attended Oxford and Harvard Law School. According to friends and colleagues, he arrived in New York City in 1970 with a dual dream: He would work as a lawyer by day and by night write the book for a musical that would take Broadway by storm.
The law won out. He soon joined the prestigious U.S. Attorney's office in Manhattan, where he worked as a prosecutor for seven years, including two as chief of the securities fraud unit. That paved the way for a career in private practice that made him one of the top securities lawyers in the U.S. (He has written a number of books and more than 100 articles).
This is the right time for a Supreme Court justice whose strong suit is securities law, and whose history shows that he's not afraid to put that enormous expertise to use on the side of the people.
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