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Going after lawyers in mortgage mess?

Anthony Lin at the New York Law Journal recalls the most obvious precedent:

Talk of modeling a new government office to dispose of those securities on the RTC [Resolution Trust Corporation] likely sent a shiver down many lawyers' spines last week. The RTC, along with the Office of Thrift Supervision (OTS) and Federal Deposit Insurance Corporation (FDIC), still inspire a special dread within the legal profession for the way they went after law firms in the early 1990s. Charged with recouping as much as possible of the $124 billion taxpayers paid for the S&L bailout, the agencies aggressively sued those whose negligence allegedly contributed to the S&L failures, with law firms near the top of the list.

Law firms that had represented thrifts, including Jones Day, Kaye Scholer and Paul, Weiss, Rifkind, Wharton & Garrison, paid millions to settle claims brought by thrift regulators. In the case of Kaye Scholer, the 1992 decision to pay $41 million came after the OTS controversially moved to freeze the law firm's assets, a potentially crippling blow.

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Rafael Mangual
Project Manager,
Legal Policy

Katherine Lazarski
Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.