Business Law Prof Blog

The Legacy of the First 100 Days

It will take some time, maybe another six months, but the full legacy of the first 100 days of the new administration will be dribbled out, story by story, local paper by local paper, in reporting on the inside corruption of the awarding of the trillions in federal funds in the various stimulus and bailout packages.  The legacy will be in bribery, favoritism, corruption, lobbying, pay to play, and political payback.

Who and Where are the AIG "Trustees"?

The press has finally, finally noted that government appointed "trustees" have control of government stock positions in a variety of finanical institutions.  There is now some bewildermen over who they are and what they are doing.  The three trustees of 80 percent of the stock of AIG are business insiders who make 100,000 dollars a year, make no public comment, meet once a month and "stay in touch by phone", and who have done nothing, nothing to help this struggling company.

The BofA Deal

The transcript of Paulson threatening the job of CEO Lewis if he does not close the Merrill Lynch deal has re-ignited the fuse on whether, in particular, the government overplayed its hand in forcing the merger and on whether, in general, the government is simply exercising too much power over the financial industry and others.  The answer to both questions is affirmative.  Private industry leaders need to grow tougher back-bones and stand up to these threats.  Private lawyer should investigate whether they can sue government officials for economic torts under the Federal Tort Claims Act. 

The Hunstman Case

A panel in Vegas discussed the Delaware Chancery case on Apollo v Huntsman.  Comments by Chancellor Lamb, if reported properly (and big it), reveal that a willingness to negotiate a settlement could affect the outcome of busted deal cases.  Why? It should not affect the merits and Judges should do what they are paid to do -- decide cases on the merits when parties cannot agree.  A Judge that does not want to decide cases should not be a judge.

Stress Tests Test Disclosure Obligation

The government's games with "Stress Tests" for banks show once again that disclosure to shareholders if "for others."  Shareholders of banks that are evaluated want to know the results as soon as their executives learn them.  Yet government and bank executives do not want to reveal them.  Who wins, banks executives.  When the Stress Tests finally came out, guess what -- they will be late, negotiated, and nobody will fail.

Broadcom Case

When District Judge Carney threw out portions of the criminal case against Broadcom for backdating stock options, he did so on grounds that has the corporate bar taking notice.  The  corporate attorneys failed to tell an executive that they represented the corporation and not him.  This is an old, old problem in corporate legal representation.  A corporation attempts to save a few bucks by having a corporate counsel "help" executives as well.  Penny wise and pound foolish.

Thomsen Cashs In

Linda Thomsen, the chief enforcement officer at the SEC who left (?) after a poor record of SEC enforcement (and Congressional testimony on same) during the Madoff scandal years has landed a fat job at Davis Polk when firms are downsizing. 

Congress and 401(k)s: Pensioners--Invest in TARP or Else!

Congressional leaders and Administration officials, frustrated with the amount of private money sitting on the sidelines in our economic crisis, will soon announce, according to unnamed sources inside the White House, a bill that requires all those who hold 401(k) plans to invest at least 25% of the remaining funds in those plans in the White House's new private-public partnership program that will buy bank's toxic assets.  The unnamed source stated that 401(k) pension plans had been given a "free ride" on the government's bailout plans and need to participate along with everyone else.  Those 401(k) plan holders that refused to invest would be jailed in Gitmo.     

In an unrelated development, the President has order GM to fire race driver Dale Earnhart,.Jr.  "He is a slaker who is not winning any races,"  the President is reported to have said.