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Huge New York law firm Dewey & LaBoeuf is about to shut down, after boss Steven Davis bankrupted the firm by giving lawyers multi-million dollar guarantees that the company couldn’t afford.That was of course moronic:
Davis bet the firm and lost.
But Barry Ritholtz reminds us of another dumb mistake the firm made:
It didn’t borrow hundreds of billions of dollars from pension funds, insurance companies, and other investors and use the money to make a lot of idiotic loans and pay its lawyers huge bonuses.
If Dewey had done that, it would have become Too Big To Fail.
And the government would have bailed it out.
And all the lawyers would get to keep their huge bonuses as well as their jobs–just like all the bankers at the Wall Street firms that bet their companies and lost.
Instead, Dewey is just going bust.
How dumb can you be?
* We jest, of course. This just reveals how fantastically stupid our country’s Too Big To Fail policy is. It undermines the basic tenet of capitalism: When you do something stupid, you pay the price.
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