A "Landmark" Fine

BLAME FOR THE SAVINGS AND LOAN FIASCO FALLS not just on executives of the thrift institutions but also on accountants and lawyers who closed their eyes to clients' shenanigans. So says the U.S. government, which claims a "landmark" victory in making that case. Ernst & Young, one of the Big Six accounting firms, agreed to pay a near record fine of $400 million to settle a slew of cases charging it with failing to blow a whistle on S&Ls it audited. For example, say the feds, the firm failed to challenge fictitious sales of real estate made by the now defunct Lincoln Savings & Loan in order to inflate its reported profits. Ernst & Young might have been socked $1 billion if it had lost all the individual cases the government had pursued; now its 2,000 partners will pay only $100 million, insurers the other $300 million. But the prosecutors short-circuited as much as 10 years of potential litigation and think they have established an important precedent tightening standards of professional responsibility.