Instead of doing time, the two stars of Ireland’s financial crisis will be probably just be picking up trash on the side of the highway. Read more »
Anglo Irish Bank
- 30 Apr 2014 at 2:23 PM
- 27 Jul 2012 at 5:03 PM
When people talk about financial innovation one of the main things they mean is legal innovation. CDOs, ETFs, MERS, the poison pill – most of the ways to smooth or roughen the path of investment take the form of jamming entities and contracts together in ways they’ve never gone together before.
Sort of by definition this innovation gets you ahead of what you know works legally: in the Anglo-American legal system, you mostly know for certain that something works because it already exists and some court or regulatory body has looked at it and found it okay, and for that to happen it has to exist first, before you know it works, all exposed and risky.* (You might ponder in your cold cold heart whether this order of operations helps explain why banking is so scandal-ridden.**) So you go to lawyers and you ask them if it works and they read the tea leaves of statutes and prior court decisions and they say go with it and mostly they’re right – because if that wasn’t the case you’d get better lawyers – but sometimes they’re wrong.
Sometimes you’re sort of surprised they’re right. Once upon a time a lawyer told a company “here’s what you do: you issue rights to all your shareholders, and as soon as a hostile bidder acquires 15% of the company, that bidder’s rights will be cancelled and everyone else’s will flip into a zillionty billion shares and the hostile bidder will be diluted down to nothing and you’ll be like ‘haha, now try taking us over.’” This was before my time, but I’m pretty sure that when he said this everyone looked at him funny. And then eventually someone did it, to see what would happen, and the courts looked at it and said “yeah, that sounds good,” and now that is a thing (though not as much as it used to be), and that lawyer is pretty rich.
Other times – most times – the lawyers seem right, so you do it, and that becomes self-reinforcing. One company does a novel thing because the lawyers think it’s okay, and then another company does that thing, and pretty soon everyone’s doing that thing, and every lawyer thinks it’s okay because, hey, everyone’s doing it, and then when it gets to the courts the lawyers are all “of course this is okay, everyone does it, are you nuts?” Often the courts are persuaded by this, though not always, and again go think about banking scandals where everyone just assumed that what they were doing was okay because everyone else was doing the same thing.
- Prison Watch '14: Anglo-Irish Bank Execs April 30, 2014
- Bill Ackman Hates The Hell Out Of Herbalife Because God Damnit He Loves America July 22, 2014
- Deutsche Bank CFO Probably Doing Some Soul-Searching Right About Now July 23, 2014
- Opening Bell: 07.23.14 July 23, 2014
- Federal Reserve Suggests Deutsche Bank Just Scrap The Whole Thing And Start Over July 22, 2014
- Friendship Means Not Gloating About The $234 Million You Just Made On Herbalife July 23, 2014
- Women In Business Are Drinking Their Way Through The Glass Ceiling July 21, 2014
- Carmelo Anthony Is A Venture Capitalist Now July 22, 2014
- Wall Street Economists Will Have To Get Their Annual "Ego Booster" Elsewhere This Year July 22, 2014
- Renaissance Technologies: Buy-And-Hold Investor July 1, 2013
- Executive Editor
- Bess Levin
How Can We Help You?
- Send tips to:
- For tech issues email:
- For advertising or events email:
- For research or custom solutions email:
- Dealbreaker is published by Breaking Media.
For a full list of our sites, services and staff visit breakingmedia.com