Thursday, March 16, 2006

Big Bully Spitzer sues HR Block

The "Big Bully" NYS AG Eliot Spitzer, and likely future governor, has taken suit against HR Block for offering retirement accounts tailored for low and middle income families that... apparently, weren't intended to help them save money.

The civil complaint filed today in State Supreme Court in Manhattan cites internal documents showing that H&R Block’s senior management knew that many of its customers were losing money on their Express IRAs. For example, in a 2002 email to Mark Ernst, the company CEO, a district manager complained about the impact of these accounts on customers:

“I really don’t think maintenance fees should exceed the amount of interest that we are paying on these accounts. Clients won’t be happy seeing [their] investments decreasing … .”

What we see here is the AG working to defend investors from what appears predatoryditory behavior from financial institutions. This is part of market discipline, where the outcome is keeping investors confident that those that will look to cheat them, will be held accountable. As a result, they can have confidence in who handles their money. Without this kind of accountability, confidence erodeerrode overtime and the capital market would suffer for it.

Although it pains me to have to point out that prosecuting criminal behavior is a good thing, it seems necessary. Too many Republicans seem to espouse the talking point that enforcing the law is bad for New York's economy.