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January 30, 2014


I have prosecuted and defended many civil lawsuits for damages arising from tortuous conduct. Say, for instance, you are out late and have had one too many. You rear-end a car at a stop light and are clearly negligent. The only thing left to be settled or litigate is the amount of money damages to be paid to your victim. There are more or less universal rules that apply to what and how we measure such loss to arrive at a just settlement or verdict. Some of the elements of damages include lost future wages and medical costs, pain and suffering, degree of impairment which reduces future ability to earn income etc. You in such a case would be liable to pay in damages all such costs arising from the accident as well as all future damages proximately flowing from your wrongful conduct.

In all such cases, the fundamental objective is to try to make the plaintiff victim as whole as he or she would have been had the accident never occurred. The system is necessarily imperfect, but is the best that can be done in the name of just compensation for harm done, and if the settlement or verdict exceeds your liability insurance company’s limits, then you are personally liable for the excess.

The point to be made here is that, like penalties assessed in athletic contests, you must pay a price for your wrongful conduct. You have violated the rules and must pay the price, either in foregone points or money. You are not allowed to profit from your wrongful conduct, whether such conduct is deliberate or the result of negligence. Whether in points or money, you are not allowed to keep your ill-gotten gain and must pay for the damage you have done in the name of just compensation to those harmed by your wrongful conduct. The rule is as universal as the law of gravity.

Fast forward to the role of the big Wall Street banks in 2007-2008 – they peddled “funny paper” around the globe in order to make a huge killing and knew their reserves and undergirding collateral for such paper were inadequate to cover the loss if their scheme blew. It blew. The international financial system was on the edge of collapse. You and I bailed out all such banks (except one) and our Fed Chair (Bernanke) testified that all such banks were technically insolvent. (No kidding, Mr. Chairman. Do you mean to say that these banks don’t carry a zillion dollars in reserves? Where are the regulators?)

The Fed in one way or another inserted trillions of dollars of liquidity into the system to avoid meltdown and international depression. It worked, but not without trillions of dollars in damages done to our economy, our country and our people, damages (among others that could be identified) that are still occurring daily in terms of unemployment and a shriveled economy where trillions of dollars in economic production did not happen and is not happening, where we are paying  billions of dollars in food stamps and unemployment compensation due to the wrongdoing antics of crapshooters from Wall Street banks, who, as it turned out, were playing with OUR MONEY. Suffice it to say that these banks were at least guilty of tortuous if not criminal conduct that damaged and is damaging our country’s economy and its people in immense amounts yet to be known, and if this were treated as an ordinary tort or even crime (as it should be), all of these banks would have long since been out of business (as perhaps they should be). If they are to be held properly responsible for their wrongdoing (like the drunk driver discussed above), then how and why can they still be in business? They are still in business and even making historic profits because we coddle them. What to do? Stay tuned for Part III.  GERALD  E


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