I'm not voicing an opinion on whether or not the NCAA should levy penalties. But Scahd's (and your) interpretation seems completely at odds with the facts. Have you read the letter Emmert sent to Penn State in November, clearly telling them why they are at risk for being found guilty of lack of institutional control? Emmert has already listed the applicable rules. It is very clear that the NCAA can act if they wish. And with public sentiment generally against Penn St, it could certainly happen.
http://www.psu.edu/ur/2011/NCAA.pdf
in the letter, Emmert invokes the following rules as possibly applicable and
required Penn St to explain why they were not in violation. Penn St may have a very difficult time if Spanier is indicted along with Curley and Scultz. It isn't Sandusky, but the coverup that could eventually sink them.
Article 2.1: The principle of institutional control and responsibility -- "it is the responsibility of each member institution to control its intercollegiate athletics program in compliance with the rules and regulations of the Association. The
institution's president or chancellor is responsible for the administration of all aspects of the athletics program. ... The institution's responsibility for the conduct of its intercollegiate athletics program includes responsibility for the actions of its staff members and for the actions of any other individual or organization engaged in activities promoting the athletics interests of the institution."
Article 2.4: The principle of sportsmanship and ethical conduct -- athletics should "promote the character development of participants, to enhance the integrity of higher education and to promote civility in society, student-athletes, coaches, and all others associated with these athletics programs and events should adhere to such fundamental values as respect, fairness, civility, honesty and responsibility."
Articles 6.01.1 and 6.4: General principle of institutional control (6.01.1); and Responsibility for actions of outside entities (6.4).
Bylaw 10.01.1: Ethical conduct, general principle of honesty and sportsmanship.
Bylaw 10.1: Unethical conduct -- "Unethical conduct by a prospective or enrolled student-athlete or a current or former institutional staff member, which includes any individual who performs work for the institution or the athletics department even if he or she does not receive compensation for such work, may include, but is not limited to" followed by a list of 10 possible situations.
Emmert's letter says untheical conduct "is not limited to" just the 10 scenarios delineated".
Bylaws 11.1.1 and 11.1.2.1: Conducts of athletics personnel with regards to honesty and sportsmanship (11.1.1); and Responsibility of head coach (11.1.2.1) -- The head coach bylaw states, "
It shall be the responsibility of an institution's head coach to promote an atmosphere for compliance within the program supervised by the coach and to monitor the activities regarding compliance of all assistant coaches and other administrators involved with the program who report directly or indirectly to the coach."
Bylaw 19.01.2: General principles of exemplary conduct.