Economic self-interest of course is a powerful force both outside and inside the litigation industry. Economic self-interest is in fact so powerful within the litigation industry that New York lawyers, columnists and even the DOJ in its amicus brief to the 2d Circuit had the temerity to argue that the outcome of the litigation over Argentinian debt should turn on what would be good for New York as a financial center. Thus, at page 5, DOJ’s New York lawyers argued:
“In addition, the decision could harm U.S. Interests in promoting issuers’ use of New York law and preserving New York as a global financial jurisdiction. See Allied Bank v. Banco Credito Agricola, 757 F. 2d 516, 521 (2d Cir. 1985) (“The United States has an interest in maintaining New York’s status as one of the foremost commercial centers in the world.”).
Happily, the justices of SCOTUS apparently were not moved to help New York as the arguments were not accepted in its recent rulings (see SCOTUS blog’s “easy summary” of the litigation). But, Floyd Norris at NYT is still complaining bitterly, for New York, as illustrated by his June 19, 2014 NYT article. (“In so doing, the court most likely damaged the status of New York as the world’s financial capital. It made it far less likely that genuinely troubled countries will be able to restructure their debts. And it increased the power of investors — often but not solely hedge funds that buy distressed bonds at deep discounts to face value — to prevent needed restructurings.”)
A few comments. First, one has to wonder if Eric Holder and the other DOJ lawyers asked midwest or west coast bankers and lawyers (and others ) whether they view New York’s interests as paramount to the interests of the financial community in the Midwest or on the West Coast (or elsewhere).
Second, the “it’s good for New York” argument of course will remind many of the famous misquote to the effect that it was good for the United States if it was good for General Motors. That misquote, however, actually was issued in a different vein and today is used as a rallying point for some who are not impressed by short-term financial thinking driven only by money.
Next, I’ll note that I was naïve enough in law school to think law was mainly about truth and justice, and so found it hard to really understand the law and economics people at the University of Chicago law school. Over the last 30 years, my naivete faded and indeed it became obvious that the U of C professors were in general correct – law is primarily about economics. On the other hand, even Judge Posner has admitted that economic theory and reality are often very different things and that placing too much faith in theory can be dangerous because reality can produce very harsh outcomes, a conclusion he reached and disseminated widely soon after the financial fiasco of 2008. See Richard A. Posner, A Failure of Capitalism: The Crisis of ’08 and the Descent into Depression (2009).
And, finally, the “it’s good for New York” argument provides yet another example of why Eric Holder will never be acclaimed as a great Attorney General.