2/1/09

The Lerach Solution

My wife Jody has the perfect answer to how we can get these crazy bank executives to disgorge the ill-gotten bonuses they've paid themselves even while they're on the taxpayer dole: the feds need to hire Bill Lerach to bring their case. Lerach, you'll recall, is the premiere shareholder suit litigator/corporate shakedown artist in the country. The only problem is that he's in jail right now, serving time because his law firm paid plaintiffs illegally in his assorted class actions over the years.

Whatever else you may think of Lerach, the guy scares corporate America, and he knows how to use that fear to get big settlements for his clients. Today the U.S. government is the client that needs him, in its role as major shareholder of all these badly behaving banks. Lerach's skills are too perfect for this moment for him to be paying his debt to society sitting in some country-club federal prison. Let Lerach reduce his time by bringing the cases that are tailor-made for his particular brand of hardball.

Until now the president's men have made wimpy noises about it likely being "hard" or "impossible" to claw back these recent bonuses, not to mention the other bogus zillions many bankers made while wrecking the economy. Sic Lerach on them and this entire conversation will change overnight.

6 Comments:

Blogger Ryan said...

Matt, I hope this post is a joke, or at least a space filler. What makes you think that Lerach is any less greedy than the wall streeters? This is like saying "let's put ex-Gov Blagojevich in charge of ridding all the pork from the current stimulus bill..."

Since it's difficult to tell from this post, it would be interesting to hear what you really believe about the need to claw back these bonuses. While it's certainly an easy populist issue to demonize, I think it will be virtually impossible to legally "claw back" these bonuses (how far back do you go, how deep in the organization, just banks or other companies too? etc). Let's just make sure it doesn't happen again the future and move on -- put our energy into improving the future, not trying to fix the past.

February 2, 2009 at 10:16 AM  
Blogger Robert Allan Schueler, artist said...

Just time to SHIFT the focus, towards the heart of reality. Looking forward to reading your new book and perspectives on the changes heading our way.
Come play with the White House Dream Team.us and have a blast!!!

February 3, 2009 at 8:40 AM  
Blogger John said...

Great TV series in the idea...kind of like "Shark" for the financial world. But it would take a smart economist to write it...as David Kelley is to the lawyer on TV, Matt could be for the economist on TV...

February 3, 2009 at 11:04 AM  
Blogger mdknyc said...

Yes - a clawback is in order. It should target bank executives from 1997 - 2007 - starting with Robert Rubin. Rubin not only made over $100 million with Citi in a sinecure position, but he is doubly culpable for creating the framework from which he so benefited (repeal of Glass Steagull, deregulation, etc.). Though a bit player in the world of grossly overpaid bankers, Rahm Emmanuel should surely be exposed to this process -- having earned a very quick $18 million in 2 yrs with non-existent I-bank experience but a lot of White House forged connections ($$ with which he then funded a successful congressional run). He is a poster child for what is wrong with America. Needless to say, if a clawback targeted the guilty (as it should) Chuck Prince, Stan O'Neal, etc. etc. will be doing dishes for a long time to come. (Should we also include the SEC regulators, who clearly were asleep on the job? No doubt the rating agency analysts have to held accountable!)

The bonuses earned this year may actually have been earned; banks lost money due to prior decisions (off balance sheet leverage, high risk lending, etc.), and not due to any decisions of the last year or so (e.g. subprime lending and securitization dried up in early 2007).

Groundrules - 1) clawback from responsible parties and 2) those responsible for the rules (the politician-bankers and banker-politicians) that made the excesses acceptible should bear the lion's share of the guilt. We should expect people to be greedy; but we should have institutions that limit and punish the pernicious effects of egregious individual greed.

February 6, 2009 at 6:21 AM  
Blogger RedSoxFan said...

If Lerach isn't already in jail he should be.

February 10, 2009 at 7:08 AM  
Blogger Bill Karwin said...

Are we subjects of the cult of personality so much that we would need someone like Lerach to take this on?

It's like saying no one but Johnny Cochran could defend against a murder indictment, or that no one but Jimmy Carter could broker a treaty in the Middle East. Just because these individuals are famous for their achievements so doesn't mean no one else can be just as successful given a similar task.

Sure, credibility, reputation, and fame counts for a lot, but these are not the sole qualifications. Don't turn public service into a game restricted to celebrities.

March 7, 2009 at 12:36 PM  

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