Still Pissed Off About the Hawley-Smoot Tariff

Sunday, September 04, 2005

The Court Gets it Right

In Friday's Wall Street Journal, page A14 (which explains in part why I haven't seen this anywhere else), there is a short piece on Charles Hurwitz winning -- get this -- $72 million dollars in attorney's fees against the FDIC. At first I thought that must be a typo, because no one spends 72 million on attorney's fees.

In 1995, the government sued Mr. Hurwitz in connection with a failed Texas thrift. According to the story, the Clinton-era FDIC sued ostensibly to argue Hurwitz violated a capitalization requirement (which it never did prove), but at the same time it was working with environmental groups to try to get some forestland owned by Maxxam, a conglomerate headed by Hurwitz. The FDIC dropped the suit in 2002, but then illegally funded an investigation of the same matter by the Office of Thrift Supervision. So Hurwitz countersued.

"What the feds were really trying to do, he maintained, was placate environmentalists by forcing a separate Maxxam subsidiary, the Pacific Lumber timber company, to give up some 5,000 acres of redwood forest in Northern California.

"Mr. Hurwitz wasn't being paranoid about the government's motives. As Judge Hughes noted in his ruling, an investigation of the FDIC by Congress in 2000 uncovered drafts of internal memos that showed the agency's own lawyers had predicted long odds that its original lawsuit would succeed on the merits. Moreover, the same inquiry revealed that the FDIC lied repeatedly when it said it hadn't been in touch with environmental groups prior to suing Mr. Hurwitz in 1995."

Judge Hughes found that the feds, animated by hostility to successful entrepreneurs and close ties to militant environmentalist groups, sought a ruling against Maxxam which it could then "trade" for the California timber land. Hence the $72 million dollar judgment, for a gross abuse of government power.

The outcome isn't very satisfying. Sure, I'm glad that Hurwitz gets vindication for all his woes. But at the same time, he recovers that money from taxpayer funds, meaning you are paying for government perfidy. And the FDIC staff in place at the time of the suit is all gone now, so the black eye doesn't even directly hit the perpetrators. As Judge Hughes noted, "this is a cautionary tale," that, in the words of Barry Goldwater, "a government that is big enough to give you anything you want is also big enough to take away everything you have." Liberal dreams of massive, intrusive government (with exceptions for homosexual sodomy or abortion) should scare the crap out of you, and its even worse when the conservatives do it, because it means there is no viable political alternative. Hey, at least private property still has some protection on the courts.

Update: More at the Washington Post, courtesy of The Conspiracy to Keep You Poor and Stupid. The Wall Street Journal's archive requires a subscription, so I'll go with WaPo.