“FERAL”

Sydney M. Williams

Thought of the Day

“FERAL”

February 27, 2012

While the concept of FERAL (Full Employment via Ridiculous Acts for Lawyers) is a spoof, it is based on the consequences of increased regulation (think EPA, healthcare and financial services) and lawsuits filed against such formerly august institutions like Fannie Mae and Freddie Mac. There is no unemployment for lawyers in the Beltway. In fact, Washington has become a city of lawyers gone wild. When lawyers create a problem, lawyers must solve it. The Capitol is a feeding trough for lawyers.

The federal government has always been dominated by lawyers. When the First Congress met in New York City in 1789 more than half the delegates were lawyers – not surprisingly, as many had been charged with helping to write the Constitution. Twenty-six of forty-four Presidents have been lawyers. One of them, William Howard Taft, explained it: “And I still insist that it is the law and the lawyer that make popular government under a written constitution and written statutes possible.” Nevertheless, some of the great ones – Washington, Theodore Roosevelt, Eisenhower and Reagan – were not; whereas Franklin Pierce and Richard Nixon were, and as Barack Obama is. Thirty-four of fifty-five signers of the Constitution in 1787 were lawyers. In the current Congress, 202 of 535 members are lawyers. Lawyers comprise about 13% of Washington, D.C’s population, but represent about one half of one percent of the population of the Country.

Lawyers dominate our government in a way no other profession does. Lawyers have a tendency to protect and provide employment to one another. In her 2004 novel, The Falls, Joyce Carol Oates writes presciently about today’s Washington: “How lawyers make work for one another! You’re all priests, worshipping the same god. No wonder you adore one another.” For example, the current issue of The Economist notes that the EPA estimates that complying with new mercury standards will cost businesses $10 billion a year, much of that in legal fees.

I realize that lawyers are necessary, not only because of the litigious nature of our society, but because we are a nation of laws. I have no objection to lawyers getting rich, but I do when they are paid with my dime. According to the Bureau of Labor Statistics (BLS) the median wage for a lawyer working for the federal government is 14 percent higher than the median wage for an attorney in private practice.

What prompted this diatribe was an article by Gretchen Morgenson that appeared last week in the New York Times, headlined “Legal Fees Mount at Fannie and Freddie.” Ms. Morgenson, who is one of the best investigative journalists in the business, wrote that, in the three years since taxpayers rescued the two mortgage giants, taxpayers have forked over $50 million to defend men who were instrumental in nearly bringing the country’s financial system to its knees. If one goes back to 2004 when Franklin Raines resigned due to accounting irregularities, the amount we taxpayers, according to Ms. Morgenson, have paid to defend what have to be some of the slimiest creatures that ever worked in Washington is $160 million. And, of course, the two members of Congress who did more to permit the miscreant behavior by Freddie Mac’s and Fannie Mae were both lawyers – Senator Chris Dodd of Connecticut and Representative Barney Frank of Massachusetts. Jonathon Laing, in last weekend’s Barron’s, confirms Ms. Morgenson’s numbers.

Mr. Raines, who would have had a hard time pleading ignorance (he was a Rhodes Scholar and is a graduate of Harvard Law School), was accused of “accounting irregularities” that allowed him to pick up $90 million in bonuses. A settlement with the government allowed Mr. Raines and two other executives to pay a fine of $3 million. He also agreed to give up $5.3 million in “other benefits”, to “donate” $1.6 million and to “give up” worthless stock options that had been valued at $15.6 million when issued. It used to be that if one wanted to get rich, Wall Street beckoned; now it’s Capitol Hill, ‘K’ Street, or even the White House – think Bill Clinton and Al Gore! Whatever happened to the concept of service? Lawrence Lessig, professor at Harvard Law School asks: “Lawyers rarely test their power, or the power they promote, against this simple pragmatic question: Will it do good?”

Now, I understand that the legal costs, in the case of Freddie Mac and Fannie Mae, are the responsibility of taxpayers because of contracts struck by the companies before they collapsed. The contracts, however, were drawn up by lawyers for lawyers. What chance does the taxpayer have in such negotiations? The whole sorry saga is indicative of what is wrong with Washington. Traders at large publically owned investment banks fell victim to the same malady – when the money is not yours, it’s treated differently. Congress, as keeper of the purse, has a fiduciary responsibility to the millions of taxpayers who have entrusted them with their money. There is no sense of accountability. The President names a new Czar, Congress makes a new budget allocation; the money is not theirs – who and where is the fiduciary? Over the years, both the President and Congress have totally abrogated their responsibilities to taxpayers.

To a large part these concerns explain the popularity of the Tea Party and Ron Paul’s candidacy. There are no grown-ups in Washington. My mother used to say, when denying me a new toy, that money does not grow on trees. It does not. Governor Mitch Daniels, in his book Keeping the Republic, wrote that when he first became Governor of Indiana he had to remind Indiana state workers that they work for the taxpayers, not the other way around.

But, it has provided a feeding frenzy for lawyers. Since the defendants, in the case of former executives at Fannie Mae and Freddie Mac, are not footing the bills, the lawyers rack up the hours and no one represents those who are paying for this circus – the taxpayers. It is a scam that should be publicized and one that should be halted.