The Fine Art of Litigation
When wealthy folks rip each other off, the offended party seeks government and judicial protection. However, these folks think nothing of forcing the average consumer to waive legal remedies and accept arbitration. They also lobby Congress and state legislatures to restrict consumer rights and protections (see, yesterday’s blog on consumer finance). Last Saturday The New York Times featured Ronald O. Perelman’s lawsuit against his former art dealer, Larry Gagosian. According to Mr. Perelman, Mr. Gagosian engaged in various practices that artificially inflated art prices and enriched Mr. Gagosian. Aside from seeking damages, Mr. Perelman is advocating greater transparency in the market for high-end art. When you’re chairman of McAndrews & Forbes Holdings, own Warhols and Lichtensteins, and command a 257-foot yacht, you have the financial wherewithal to and interest in reforming the market for works of art.
Substitute home mortgage, auto loan, or student debt for fine art and you’ll find many of the same predatory practices that are the basis for Mr. Perelman’s outrage. However, you won’t find very many financiers or corporate titans calling for fairer business practices or greater transparency to protect the average consumer. Many of the wealthy want the judicial and regulatory systems to be at their beck and call when they’re aggrieved. However, that’s not their position when their customers or clients complain.
In an Op-Ed column in Monday’s Times, Steve Rattner, former Czar of the auto bailout, catalogs the efforts of wealthy investors to recoup losses from the US government in the wake of the bailout of AIG, Fannie Mae, and Freddie Mac. Mr. Rattner argues that these claims are unfounded and considers these lawsuits to be extortion. Mr. Rattner is right in arguing that it’s hypocritical for wealthy executives like Maurice Greenberg of AIG or hedge fund managers to employ many of the same tactics that they decry when class action lawyers, public pension plans, or aggrieved consumers seek redress.
As best I can tell, the wealthy have captured all three branches of our government.