A scruffy-looking Occupy Wall Street protester takes out a big black magic marker and writes on a tattered piece of cardboard: “Ban ‘Naked’ Credit Default Swaps.” Others hold signs calling for an end to “mortgage-backed securities” and “self-settled asset protection trusts.” These demonstrations have a different, and more sophisticated, message than any we’ve seen before. “Hey, Hey, Ho, Ho — Interest Rate Swap Contracts Have Got To Go!”
By and large, it’s investment bankers who have been in the protesters’ crosshairs, but the Occupy Wall Street (OWS) demonstrations also offer an opportunity to consider what role lawyers may have played in the creation of these sophisticated financial instruments, enabling the overreaching decried on the OWS protesters’ placards. Behind every credit default swap or short of subprime mortgage-backed assets sit legal counsel sanctioning these practices. The greed that has motivated bankers to sacrifice the public’s interests for short-term personal gain has been made possible, in no small part, by the work of lawyers.
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