Saturday, October 30, 2010

The Sanctity of Contracts, Revisited

Recall back in the days when we were being asked to hand out hundreds of millions of taxpayer dollars as bonuses to the incompetents at AIG who helped engineer the economic disaster? How many lectures we received about "the sanctity of contracts", even from an industry notorious for avoiding its contractual obligations?

Every time I hear bankers and financial industry insiders assure us that the current mortgage mess is "no big deal" - that we should shrug off forged documents, the failure to have properly conveyed mortgages, even the inability of a party asking for foreclosure to prove it has any legal right to do so - I am reminded of those earlier assertions. Contracts are sacred when scrupulous adherence will line the pockets of financial and insurance industry insiders. When they might work to the benefit of the little guy, they're "red tape" to be ignored.

4 comments:

  1. The only rule that matters is the "Golden Rule." He who has the gold . . .

    Was the sanctity of contract argument really any more ridiculous than the "we can't afford to litigate" argument?

    CWD

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  2. Where do you get the idea that insurance companies are litigious? You act like there's an entire industry within the field of litigation known as "insurance defense".

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  3. . . . and the people making the argument act like they didn't know that the DoJ doesn't bill by the hour . . .

    CWD

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  4. And they also pretend that the paper and email trail associated with the exorbitant "retention bonuses" isn't likely to establish that they were deliberately divorced from performance, and entered into on a bad-faith basis with the expectation that taxpayers would pick up the tab. (We're bankrupt - quick, sign this new compensation contract you know we can't afford.)

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