22 February 2009 at 18:14
The dean of the bank M&A bar speaks to the Financial Times:
“If the phrase ‘height of stupidity’ has any meaning, it would be shown if they nationalise a US bank,” said Rodgin Cohen, chairman of law firm Sullivan and Cromwell, who has advised on many of the past year’s biggest bank rescue deals and recapitalisations.
Mr Cohen stressed that the nationalisation of a large global bank had never been tested and the unintended repercussions of such a move could be severe, particularly in relation to any of the bank’s foreign subsidiaries. He favours a plan that would infuse banks with more capital and extract bad assets from their balance sheets as quickly as possible, to boost confidence in the institutions.
“Given time, these institutions have enormous earnings capacity,” he said. “If you start to take out these bad assets, we’ll start to see confidence rebuilt. It can turn around, and it will turn around.”
And when it does turn around, we want to make sure our guys are still in charge so they can privatize the gains and share them with us.
Looks like the rent-seekers have found their mouthpiece.
Economics & Finance, Politics
banks, law firms, lawyers, lemon socialism, nationalization
23 December 2008 at 21:34
Proposed Program
A portion of the $700 billion authorized under the Emergency Economic Stabilization Act of 2008 (the “Act”) will be used to fund the Client Receivables Acquisition Program (“CRAP”).
Law firms eligible to participate in CRAP may sell client receivables to the U.S. government, thereby receiving payment for fees billed to clients who are unable, unwilling or unaware of their obligation to pay for legal advice.
Law Firm Eligibility
To be eligible to participate in CRAP, a law firm must have —
- its head office in the U.S.,
- “significant operations” in the U.S., or
- “substantial ambitions” in the U.S.
An eligible law firm must also belong to one of the following categories:
Law firms that are deemed to be “financial institutions” within the meaning of the Act. A law firm may be treated as a financial institution if the average age of its inventory and client receivables is equivalent to 12 or more working capital weeks or if Treasury determines that the firm has otherwise become, in effect, a provider of long‑term financing to its clients.
Law firms whose participation in CRAP is “necessary to promote financial market stability” for purposes of the Act. If more than 50% of a law firm’s annual revenues (on an accrual basis) are from clients who are “financial institutions” within the meaning of the Act, then Treasury may determine that purchases of the firm’s client receivables are necessary to promote financial market stability.
Law firms whose impact on local economic conditions is deemed to be unusually significant. Under program guidelines to be issued by Treasury, eligibility for participation in CRAP may be extended to a law firm whose overhead expenses on a per-lawyer basis exceed 120% of the average for its peer group, or if the firm is otherwise determined to have an unusually significant impact on the local labor, real estate or catering markets.
Read more…
Economics & Finance, Law
law firms, recession, TARP