Hightower Lowdown

Even a dog knows the difference between being stumbled over--and being kicked. But would imperious Wall Street bankers feel it if they got a kick in the pants?

Jed Rakoff, a federal judge in New York, decided to find out. Earlier this year, lawyers for Bank of America and the Securities and Exchange Commission strolled into Judge Rakoff's courtroom asking him to ratify a legal settlement between the bank and the watchdog agency--usually a routine matter. But this case involved the $5.8 billion in executive bonuses that a subsidiary of Bank of America had doled out last year--while the bank was getting a $45-billion taxpayer bailout.

Worse, the bankers had lied to their own shareholders, telling them no bonuses would be paid--and lying to shareholders violates SEC rules. For all that, our watchdog agency assessed a measly fine of $33 million, which is less than the individual bonuses taken home by some of the bank executives.

To the astonishment of those who cooked up this deal, the judge refused to rubberstamp it. Instead, he demanded the names of each executive responsible for the bonus ripoff, saying they should be held personally accountable for their crimes. The bankers and the SEC bobbed and weaved around his courtroom, but, invoking morality and fair play, and channeling the public's rising anger over Wall Street's greed and Washington's meek complicity, the judge voided the settlement on September 14.

Now, Bank of America and the SEC face a public trial over their dirty deal... and they are definitely feeling the judge's kick in their collective pants.