TARP fraud: A culture “hostile to law”

With word of federal probes under way into alleged fraud involving banking bailout funds, School of Law Professor Tamar Frankel, an authority on securities law and legal ethics, says those receiving TARP funds should be subject to ongoing examinations.

“‘It’s the culture, stupid.’ Law not only limits innovations, it also controls competition on innovative antisocial behavior. We have created a culture that is hostile to law.  Our culture attributes to lawmakers and regulators corrupt practices and intent. This justifies the same behavior by those subject to the laws and regulations.

“The fact that examinations started soon after taxpayers’ money was doled out is a good sign. The better would have been examinations before money was given.  To be sure, time pressure made installment of such examinations impossible. But now they are possible and should be established — not once, but as a matter of course, long-term and often.

“At the same time, the examiners should be shielded from temptation as well. A balance must be achieved or our financial system will not revive.”

Contact Tamar Frankel, 617-353-3773, tfrankel@bu.edu

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