5 Dumbest Things on Wall Street: Dec. 2

5. Rakoff Rocks

Wall Street banks and the Securities and Exchange Commission may dread Judge Jed, but, quite frankly, we here at the Five Dumbest Lab think Rakoff rocks.

In his latest rebuffing of the financial industry and its primary regulator, U.S. District Judge Jed Rakoff smacked down a proposed $285 million settlement between Citigroup(C) and the SEC over a $1 billion mortgage-bond deal Monday. The SEC had accused Citigroup of misleading investors in a sale of securities backed by mortgages that it then bet against. Rakoff said that the pact was "neither reasonable, nor fair, nor adequate, nor in the public interest" and ordered a trial to be held on July 16, 2012.

Amen your honor! And oh so poetic as well! Your latest rebuke ranks right up there with your 2009 rejection of the $33 million settlement between the SEC and Bank of America(BAC) over its Merrill Lynch acquisition. If we remember correctly, BofA eventually settled that case for $150 million, despite you referring to the result as "half-baked justice at best."

Oh man. If it pleases the Court, we would like to approach the bench and ask for your autograph, because you sure as heck know how to please us.

Sincerely, why should these fat cat bankers (Thanks Mr. President) pay fines without admitting or denying the charges when they misbehave? If they've been accused of wrongdoing, then they should tell it to the judge just like everybody else. Sure, the headlines looked good last year when the SEC squeezed $550 million out of Goldman Sachs(GS) for similar misdoings, but that was akin to asking Lloyd Blankfein to mail in a parking ticket after he helped cause a multi-car pile-up in the global economy. Let's be serious, what the SEC got from that Goldman payoff was convenience, not justice.

And while the SEC maintains that $285 million is a fair penalty, along the lines of what the agency would have won in a trial, we agree with Rakoff when he accuses the SEC of seeking "a quick headline" and moving on.

Look, we know the wheels of justice turn slowly, but what's the rush? It's not like something's occupying Wall Street or something.