Racketeering

Drudge posted a report that public trust of media has fallen to record lows. It is unsurprising that an industry that sells -- above all -- trust suffers economically as it loses trust. On the other hand, perhaps trust is merely more diffuse. Media does increasingly market "Trust Us, Don't Trust Them."

One source of any loss of trust is that, as people receive information from multiple sources, slanted editing is readily apparent and, therefore, costly.

An example from yesterday's news: Reading the Times one is led to believe that the proposed BofA SEC settlement was thrown out of court over concerns about irresponsible management and overly lax regulation. Obama, according to the Times, is, of course, rushing to save the day by pushing for "tougher" regulation. Along the way the health care debate is mentioned and the gentle reader is informed of Obama appointee Mary Schapiro's heroic efforts to revive the SEC's "reputation as an effective watchdog of Wall Street."

The actual facts -- buried, mostly, in the bottom of the article -- are these: BofA was coerced by the Governments, as part of effort to stem the financial crisis, to purchase Merrill. The S.E.C. then turned around and sued BofA management claiming -- apparently with justice -- that it failed to adequately inform shareholders of pending Merrill bonuses. The parties agreed that BofA should pay $33M. The judge, above all noting the gross injustice of making the alleged victim -- BofA shareholders -- pay the penalty ripped the racketeers, both of whom profit from the arrangement (The S.E.C. by getting to claim that it is exposing wrongdoing). A dozen lines up from the bottom, the article notes that screwing shareholders in this manner (perhaps, amongst others) is a long-standing S.E.C. practice.

The readily apparent takeaway: The Judge’s issue was with an until-now-unchecked, out-of-control, regulator abusing the people it was charged with protecting; the precise opposite of the "overly-lax regulator" trip the Times tried to sell.

More accurate reporting of the decision is available from this WSJ op-ed.