Saturday, December 18, 2010

Lawyers Suck

Most people don't remember the Resolution Trust Corporation.

Back in the 1980's, Ronald Reagan fostered a plan to de-regulate the financial sector.  I (and many others) maintain that the final act of this drama was the financial collapse of 2007.  To date we  have yet to do anything to restore adequate safeguards on the world's financial systems destroyed by Reagan.

One of the first victims of this de-regulation was the Savings and Loan sector, which by 1990 was nearly 100% destroyed.  Depositors in the S&L's lost billions, so congress commissioned a corporation made of lawyers to try and recover some of this money.

Once created, the RTC began systematically suing anyone ever associated with the hundreds of collapsed Savings and Loans that still had money, the vast majority of which were absolutely innocent of any wrong-doing.  Included in their attacks was future (now former) president George W Bush (who, thanks to his political connections, settled his RTC suit for a mere $50,000).

The RTC contracted private lawyers all over the country to prosecute their claims costing billions of dollars.  In the end, the RTC recovered only slightly more than the expenses they incurred and none of the injured S&L depositors for whom the act purported to protect saw a dime, despite the billions made by law firms across the country.

In 2009, Bernard Madoff was arrested for running a ponzi scheme (a scheme which would have been impossible had Reagan not de-regulated the financial sector) leaving his many investors empty handed.

Enter lawyer Irving Piccard, who on the behalf of Madoff investors who lost money began suing... Madoff investors who lost money.

You might ask, "why would people hire this guy to sue themselves?"   They didn't, the court authorized his actions as part of a class action.  You, as a private citizen, have no choice but to be part of the class if the court says so.

So, Lawyer Piccard sues these people, many of which lost everything they invested in Madoff, on the premise that when the fund was in business, they made profits on it, with the promise that, in the end, the money will be redistributed fairly amongst the injured, less (of course) Piccard's vast legal expenses.

In other words, they pay out the ass and get nothing in return while Piccard makes millions (if not billions).

Way to make the victims pay twice courts.

Most people aren't going to care very much about this story.  Most of Madoff's victims were already wealthy, even if they lost the bulk of their life's savings in his scheme.   I've written for years about how the system of class-action law in this country is broadly and obviously corrupt, but most people really don't care much because it's mostly successful, wealthy people who are sued while the working class and lower middle class are the ones who might one day receive a share of the proceeds after the lawyers take most of it.

Maybe they're right.  Maybe it doesn't matter very much if a bunch of rich old people get screwed over twice.  If there's anything you take from this article though, remember this, Ronald Reagan didn't do you any favors.  Most of the hardships we now face lay at his feet.  He was a stupid, corrupt man and I hope one day people will realize it.  Oh yeah, lawyers suck.  Remember that part too.

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