Tuesday, February 16, 2016


"Big" is bad.

"Small" is good.


When we are taught to all be good little capitalists, the purpose of the drill is to build our enterprise to dominating size, success and stated capital account. Those crafty enough, energetic enough and visionary enough to actually get there and become a huge success are rewarded with serial antitrust investigations penalties and injunctions. For the most part, their fault is having pursued the American dream too freaking successfully.

This has become so stylish that it is no longer confined to the United States of America. A basic legal search for EU antitrust and monopolization prosecutions will yield many more Microsoft contacts than for the United States Department of Justice. Old Billy might have started in a garage or in his mother's basement, or whatever the folklore is, but when he got to be a financial juggernaut, he was officially assigned to the Axis of Evil.

All of which circles me back to the current level of white noise about breaking up the "big banks."

If you haven't already done so, do yourself a favor and read "Too Big to Fail" and "The Big Short". (The big short film will not tell you what you need to know).

While it is very nuanced, the essential ingredient in one third of the world economy being vaporized over a period of about two months is not "greedy people taking out mortgages they could not afford…" That is a very nice, Puritan, blameworthy explanation for the economic downturn and it is also a little bit like blaming heroin addicts for the violent behavior of the Mexican drug cartels.

No, the essential ingredient for the collapse of the economy was the activity of brokerage firms (now, try to follow this) SELLING WORTHLESS DEBT IN THE SECURITIES MARKET AS A "FUTURE."

Please understand that this kind of market-making is not a banking function at all. It's a securities function, a brokerage function, if you will.

Until late 1980s traditional banking, that is "technically fractional reserve banking", such as making loans and  managing accounts, perhaps even overseeing trusts, was completely separate from brokerage, no matter the size of the bank. After the change in the law allowing the banking function and the brokerage function to occur, essentially under the same roof, bank size naturally grew. This is an obvious outcome because the bank was simply doing more tasks. As the demand for gambling propositions and hedging increased, the market-making function for new investment vehicles increased and, frankly, the maturing bank/brokerages became more aggressive.

But the important thing to understand is that the devil in all this was not SIZE. It was that the same people were creating markets for this junk who were deciding what junk to fund.

In short, simply breaking up the banks and making them smaller accomplishes nothing except inconvenience for the banks' hopefully successful and honorable customers. The mischief in "securities banking" is the blend of the function of marketer and financier of the market.

Literally from about 2006 to about 2008 major brokerages, linked to banks were able to cover up the weakness in all the deliciously named securities vehicles that were involved in what are generically called "credit default swaps." There were literally about 50 people in the United States who recognized that the debt market related to real estate was going to crash, taking real wealth with it, while the rest of us utterly lacked the sophistication to get in front of such a path.

Lives were ruined by ridiculously irresponsible brokerage practices and access to literally trillions of dollars to cover up those failures as the securities wheezed. None of that had anything to do with size. It had everything to do with the merger of two functions which are inherently separate, one from the other, and intended to be part of an often effective system of "checks and balances."

Trust me when I tell you that this is a grossly oversimplified version of the meltdown in 2008 but it is also essentially truthful.

When anybody tells you: "I intend to break up the big banks!," Please ask them the following two questions:

"What are you going to do next?"

"How will you divide their assets, divisions and departments?"

It is in those two questions that the rubber meets the road. A mere reduction in size is a silly, destructive and futile gesture

Sunday, February 14, 2016


Golf announcers must all have skipped basic physics.  "How much does this putt break, Joe?"  

"Maybe half a ball, right to left."

(Guy in tower) "Depends on the Speed"

Ya Think???

God Rest Justice Scalia.  I will not out them but he had some friends from here in Quincy whose names would surprise you.  He was known to sneak into town on occasion.

Interesting turn of events in the GOP Debate Last night.  Rubio throws out the challenge that Cruz doesn't speak Spanish.  Cruz offers up a few words of Sophomore Spanish.  The best Spanish speaker on the stage smartly and purposely remains silent.  Bush may be wheezing, but he's not stupid.

Illinois has a strong concentration of the most skilled child care/child welfare workers in the Nation.  For years they have been employed by system which defeats their undeniable skill and dedication.  Now, a year into Rauner, more or less, we have not only a screwed up system but a comprehensively underfunded, screwed up system.  Warning:  If you're going to be a child in Illinois, be a rich one with two doting parents.  Otherwise, you're pretty much screwed.

This Sam McGann advertising is interesting.  He is blasted as "Madigan's favorite Senator".  So, If I have this correct, it is OK for him to have lied about being, not only a veteran at all, but a COMBAT VETERAN, but it's disqualifying to be in favor with Mike Madigan (which is probably a crock anyhow).  My brain is clearly out of the mainstream.

Thursday, February 11, 2016


I was wrong.

I said I believed that a certain candidate in the Republican Party had the character and integrity to admit her mistake in running a scurilous, disreputable and, in at least three respects, inaccurate television ad

In my own way, although I have no involvement in Republican politics, I vouched for her decency and excused the placement of this ad by assuming her better judgment had been overwhelmed by campaign staff and consultants. I argued that she would likely promptly issue the apology which was due for this conduct.

In writing what I wrote earlier I was well aware that very balanced and decent brothers of the bar had written that the placement of the ad, itself, was, for want of a better term, "disqualifying."

Because every human makes mistakes and because I believe firmly in redemption I held out not only the hope but the expectation that this person I know to be good and decent, would make the situation right. Several of my friends, quite publicly, told me, each in their own way, that I was being either naïve or stupid.

To explain myself,  I am more than just an old guy who practices law just for a living. I am a committed member of the brotherhood and sisterhood that makes up the national bar, the folks who function in this country every day as, if you will, "ministers of Justice".  This is as much of me as my other roles, husband, father, grandfather, veteran, any  of them.

As I noted, I'm also an old human. In the modern age we have, as applied to lawyers, "disciplinary rules." When I began practicing our guide star was not disciplinary rules, which only describe minimally acceptable conduct, our guide star was document known as the "Canons of Ethics". Two of the canons which of always stuck with me were open parents and I will paraphrase):

"Look kindly upon the needs and travails of brother lawyers, their widows and families."

"Avoid any conduct or expression which would negatively impact the public's perception of the administration of justice."

Again, because I am old, I remember when the members of the local bar quietly and privately dug deep into pockets for a brother facing an emergency situation. I also remember a number of us taking turns stopping by the office of a lawyer who was quietly going blind to read his mail to him in order that he did not miss any obligations. I remember more than once setting up a schedule for evening visit with a homebound colleague fighting a dread disease so that he had some company every day.

Yes, everybody loves to bash lawyers and talk about how they are inquisitive, money loving, self – centered sharks.

But that is not the bar I know. The general bar in Western Illinois is charitable, kind, involved, concerned and conscious that the whole of us is far greater than the sum of its parts.  Folks, the geist of our group is extend kindness and courtesy to one another, wherever possible.

It is certainly true that the younger lawyers, those with 20 or fewer years of service, have not witnessed as much of that collegiality as us old guys. Still, we can't read our monthly magazines and weekly updates without being reminded that we are called to increased civility and humanity.Understandably, your reality may be different from mine. When you witness us fighting like cats and dogs in court or when a lawyer tells you that you have no case because your boss spoke disrespectfully to you, that may inform your reality that we are a cold, cruel heartless bunch. For now, you'll have to take it on faith that the history of the bar in Western Illinois is one of enormous civility and humane treatment of our brothers and sisters.

But, you say, "what does that have to do with a political ad."

In my world and in my view the rule of civility and humane treatment proscribes any and all exploitation of human frailty. The law, just for an example, does not permit a job seeker to be examined about prior bankruptcies. Some subject matters are just so personal as to be unavailable as an employment credential. Certainly, politics involves drawing distinctions. This is an area where I am not naïve I have been the author of and the victim of ample "contrast" ads. But the "contrast" ad must be fundamentally true and must bear some rational relationship to the position sought by the parties. If it does not pass both of these litmus tests, then it is just a gratuitous, personal attack and, in my view, substandard and regrettable conduct.

Now, I have said rather boldly that folks make mistakes and that retraction and apology could wash this one out. I even said that I believe strongly in the character of the offending advertiser to do exactly that. Having run for office in the past, I understand the pressures on a given candidate and I can hypothesize how this would happen against the candidates better judgment.   Corrected early, it would have been, in my view, a very exusable error.  Until now, I considered myself a reasonable judge of character.

For an apology and a withdrawal to be effective, there was a very short window of time. When a piece of the type we are discussing is being broadcast on prearranged electronic rota, there comes a time when the information has metastasized to the point where the apology and withdrawal are without effect. In my judgment we have reached that time.

I have seen the letters and social media comments to the effect that the initial decision to run this ad was a "disqualifying event." I have resisted that view. I have held up for the integrity of the person who made the original mistake. I had dreamed on the notion of Abraham Lincoln that "better angels" would prevail.

I like to think I am not stupid. I am often intentionally naïve and hopeful. In this case, my belief in "better angels" has become unsustainable.

My colleagues who took the "disqualifying event" position immediately appear to have been correct. I am not sorry that I am slow to this position. When it comes to my brother and sister lawyers I will continue to look for reasons to view them as high integrity individuals but, in the final analyisis, I got this one wrong. There are a minimum of three lies in the offending piece… And those are just the ones about which I have personal knowledge. There may be more. There's a price to be paid for lying generally and, particularly, for lying about a brother.

As I made clear on social media, I am not involved in either campaign and I do not vote in that primary. Thus, my only interest here is in the behavior of lawyers, one to another, particularly here in Western Illinois.

Having said that, I do know a little bit about what it takes operate the State's Attorney's office from the position of State's Attorney. The holder of that office, to be effective, must be trusted by police, grand juries, the judiciary, other states attorneys, the defense bar and the Atty. Gen.'s office, the county board and the other county officeholders, not to mention the general public who are often asked to testify or provide information in  investigations when I say "trusted" I mean not just in terms of truthfulness but in terms of judgment, soundness of character, if you will. The performance of the office fails without that aspect.

It is with great regret and disappointment that I say a person who would run the subject ad and not quickly recant is unlikely to capture the trust I referenced in the preceding paragraph. It should be obvious I am trying very hard to avoid using the severe words that some other commentators on this issue have chosen.   Still, I can no longer argue with those who have stated this is, indeed, a disqualifying event.