The Big Six Take Another Huge Hit
The government has nailed another accounting firm in its hunt for culprits in the savings and loan crisis. On Nov. 23, Ernst & Young agreed to pay a record $400 million to settle potential charges that it conducted faulty audits of thrifts that were later seized by the government.
The settlement, in which the giant accounting firm did not admit wrongdoing, resolved all claims by three regulatory agencies against Ernst, stemming from its audits of roughly 300 institutions that ultimately failed in the '80s. The settlement marks the latest in a series of hefty payouts by large accounting firms to resolve disputes over their audit work during the 1980s. In the past two years, Big Six firms have paid $1 billion to settle or defend government and private claims.